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On (2), here's something I've been wondering. Shouldn't the explosion of SaaS and remote work tools close the gap between internal/external transaction costs, a

by sigil 4y ago

On (2), here's something I've been wondering. Shouldn't the explosion of SaaS and remote work tools close the gap between internal/external transaction costs, and lead to a decrease in firm size? Because we've been seeing the opposite. [0] Maybe this just hasn't shown up in the numbers yet, because there's a delayed effect? Or do SaaS and remote work tools benefit firms internally just as much, or more, than someone contracting out work on the open market? [0] https://marginalrevolution.com/wp-content/uploads/2019/01/HNS1.png https://marginalrevolution.com/wp-content/uploads/2019/01/HN...

pragmatic 4y ago
I think you are right but underestimating the sheer number of small SaaS companies out there. Just rode through a startup and acquisition in a space I’d never thought much about (way underserved but all kinds of money sliding around) until I worked there with a smaller than I would have thought possible team.
wrineha2 4y ago
Having taught this paper a couple times, the best way to think about it is a binary. Why is there 1 (a firm) and not 0 (the market)? This way shifts the internal/external viewpoint slightly. The resting state should be 0 (the market), we need to understand why we get 1 (the firm). All of that being said, SaaS and remote work tools should reduce the cost of transactions in the firm, which means expanded control of capital and more productive monitoring systems. In effect this means that the company can coordinate restrictions on output, monitor agents, and curb the costs imposed by the agents on the firm. Theory is ambiguous when it comes to markups, what the company charges versus the price that consumers pay. This might go up or go down. There is a lot of current debate on this. But the theory does suggest that markets should get more monopolized. Let me know if you need more. This is one of my research foci.

by sigil 4y ago

pragmatic 4y ago

I think you are right but underestimating the sheer number of small SaaS companies out there. Just rode through a startup and acquisition in a space I’d never thought much about (way underserved but all kinds of money sliding around) until I worked there with a smaller than I would have thought possible team.

wrineha2 4y ago

Having taught this paper a couple times, the best way to think about it is a binary. Why is there 1 (a firm) and not 0 (the market)? This way shifts the internal/external viewpoint slightly. The resting state should be 0 (the market), we need to understand why we get 1 (the firm). All of that being said, SaaS and remote work tools should reduce the cost of transactions in the firm, which means expanded control of capital and more productive monitoring systems. In effect this means that the company can coordinate restrictions on output, monitor agents, and curb the costs imposed by the agents on the firm. Theory is ambiguous when it comes to markups, what the company charges versus the price that consumers pay. This might go up or go down. There is a lot of current debate on this. But the theory does suggest that markets should get more monopolized. Let me know if you need more. This is one of my research foci.