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> What if we built technology that reduced those transaction costs to near zero? E.g. what would it mean for there to be less incentives for a firm to form? Co
by evrydayhustling 4y ago
> What if we built technology that reduced those transaction costs to near zero? E.g. what would it mean for there to be less incentives for a firm to form?
Costs of organization can also drop, making firms more competitive compared to individual contracting.
- zozbot234 4y agoIn a way, an "organization" is just a very complex smart market or mechanism that we don't bother to analyze the incentive structures of. Organizational arrangements also involve transaction costs, and these can be quite high especially as size grows, personal loyalties decrease and inside politicking dynamics become prevalent. "The Nature of the Firm" is more about exploring the contrast of these different ways of arranging cooperation among agents than asserting one as consistently better than the other.