
The Nature of the Firm - Coase - davidw
http://onlinelibrary.wiley.com/doi/10.1111/j.1468-0335.1937.tb00002.x/full
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rayiner
See also his article on the FCC, in which he applied an early version of
Coase's Theorem: <http://old.ccer.edu.cn/download/7874-1.pdf>

Unfortunately, contemporary economists have failed dramatically to appreciate
the subtly of Coase's work.

Coase is famous for his work in showing that in the absence of transaction
costs, and assuming an efficient market for a good, the market would
equilibrate in a way where the good was allocated to its highest-value uses,
regardless of the initial distribution of the good.

The theorem is very often used to justify deregulation and privatization in
various areas, and modern economists almost uniformly give short-shrift to the
assumptions underlying the theory. From the above-cited paper: "The fact that
actions might have harmful effects on others has been shown to be no obstacle
to the introduction of property rights. But it was possible to reach this
unequivocal result because the conflicts of interest were between individuals.
When large numbers of people are involved, the argument for the institution of
property rights is weakened and that for general regulations becomes
stronger." (Ronald Coase, the Federal Communications Commission at 29).

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pash
Economists qua economists broadly support socially optimal allocations of
property rights. Whether they are Pareto-improving or not is beside the point,
from a strictly economic perspective, because any socially optimal allocation
can be made Pareto-improving through transfers. That this doesn't actually
happen is a political problem, not an economic one.

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aamar
Classic 1937 essay, inspired by the question: if market economies are
successful, why do we have firms (companies), rather than large numbers of
individual free agents contracting with each other? And under what conditions
do firms have an advantage vs. a market system that goes all the way down to
the individual?

People may also find Yochai Benkler's 2002 followup applying this sort of
analysis to open source software: <http://www.benkler.org/CoasesPenguin.html>

