- Paperback: 217 pages
- Publisher: University Of Chicago Press; Reprint edition (February 15, 1990)
- Language: English
- ISBN-10: 0226111016
- ISBN-13: 978-0226111018
- Product Dimensions: 5.3 x 0.6 x 8.5 inches
- Shipping Weight: 12.2 ounces (View shipping rates and policies)
- Average Customer Review: 4.6 out of 5 stars See all reviews (23 customer reviews)
- Amazon Best Sellers Rank: #603,262 in Books (See Top 100 in Books)
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The Firm, the Market, and the Law Reprint Edition
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Top Customer Reviews
Coase is best known for two seminal articles. The earlier article "The Theory of the Firm" is the seminal work on the so-called nexus of contracts theory of the firm, as well as an early source for the transaction cost branch of the New Institutional Economics. The nexus of contracts model treats the firm not as an entity, but as an aggregate of various inputs acting together to produce goods or services. Employees provide labor. Creditors provide debt capital. Shareholders initially provide equity capital and subsequently bear the risk of losses and monitor the performance of management. Management monitors the performance of employees and coordinates the activities of all the firm's inputs. The firm is simply a legal fiction representing the complex set of contractual relationships between these inputs. Besides emphasizing the importance of examining the various contracts making up the firm, however, Coase's fundamental insight was that the contractual nature of the firm does not preclude an element of command and control absent from market transactions. If a corporate employee moves from department Y to department X he does so not because of change in relative prices, but because he is ordered to do so.Read more ›
This is _the_ book to own on the subject as Coase takes his time to explain some of the reasons why economists in general has misunderstood his argument.
It is also well worth reading if you like Oliver Williamson's elaborations on the subject as a reading of Coases original articles reveals much of Williamsons work as just that. If you haven't read Williamson's 1985 The Economic Institutions of Capitalism book I recommend it highly _after_ you've read this.
Coasean economics is important because it pushes us to make fair and realistic comparisons between private and public institutions. In 1959 Coase published an article on the Federal Communications Commission which demonstrated that market imperfections do not automatically imply the need for government regulation. Transaction costs make markets imperfect, but government suffers from its own imperfections. In 1969 Harold Demsetz explained the Coasean approach to institutional analysis in his "Institutions and Efficiency, another Viewpoint". Coase's opponents are guilty of committing the Nirvana Fallacy. Economists used to condemn markets for failing to deliver ideal conditions. Those who compare real imperfect markets to an idealized perfect government will always "prove" the need for government regulation. In reality, the nirvana of perfect government never exists, so the need for governmental intervention is always questionable.
Unfortunately, this 1959 article did not make it into this book. Instead, Coase used his 1960 follow up paper "The Problem of Social Cost" (chapter five) to explain his ideas about law and economics. Chapter five explains "The Coase Theorem" and "The Invariance Proposition". The 1960 paper on social costs is an outgrowth of an informal debate between Coase and Milton Friedman.Read more ›
Most Recent Customer Reviews
good concept, just not much of a writer. Use in lieu of sleeping pill.Published 6 months ago by Ban Sok
Why do firms exist? Why are there companies instead of cottage industries? Why should the government encourage or support the formation of firms and inforce laws that assist the... Read morePublished on March 31, 2014 by Amazon Customer
This is a seminal book, which doesn't really need more comments. Every chapter of it is full with knowledge. Read it.Published on August 22, 2013 by Greg
You really have to love and know a lot about economics to get any value out of this and even that is datedPublished on July 17, 2013 by Dwayne A Durn
Good read, provided a foundation to entrepreneurship studies. Enjoy the discourse provided comparing his work or opinions against other economist.Published on February 1, 2013 by James A. Lyons
Definitely the best book in economics since Adam Smith's Wealth of Nations. I believe the future of economics will be more promising if we would be more willingly to adopt the... Read morePublished on April 28, 2012 by De-Xing Guan
I have read a majority of the papers presented in this book. I enjoy the writing. It is not necessarily as clear as it could be but it is cogent. Read morePublished on January 14, 2011 by Sanjay V. Gopinath