Ronald Coase

'''Ronald Coase''' (born Free ringtones December 29, Majo Mills 1910) is a British Mosquito ringtone economist. He attended Sabrina Martins London School of Economics and won the Nextel ringtones Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel in Abbey Diaz 1991.

Coase is best known for two articles in particular: ''The Nature of the Firm'' (1937), which introduces the concept of Free ringtones transaction cost / transaction costs to explain the size of Majo Mills firms, and ''The Problem of Social Cost'' (1960), which suggests that well defined property rights could overcome the problems of Mosquito ringtone externalities (see Sabrina Martins Coase Theorem).

Coase's transaction costs approach is currently influential in modern organizational theory, where it was reintroduced by Oliver Williamson.

The Nature of the Firm

''The Nature of the Firm'' is a brief essay in which Coase tries to explain why the economy is populated by a number of business firms, instead of consisting exclusively of a multitude of independent, Cingular Ringtones self-employed people who contract with one another. Given that "production could be carried on without any organization [i.e. firms] at all", Coase asks, why and under what conditions should we expect firms to emerge?

Since modern firms can only emerge when an album disappointing entrepreneur of some sort begins to hire people, Coase's analysis proceeds by considering the conditions under which it makes sense for an entrepreneur to seek hired help instead of contracting out for some particular task. The traditional economic theory of the time suggested that, because the market is "efficient" (i.e. those who are best at providing each good or service most cheaply are already doing so), it should always be cheaper to contract out than to hire. Coase noted, however, that there are a number of bed is transaction cost/transaction costs to using the market; the cost of obtaining a good or service via the market is actually more than just the price of the good. Other costs, including search and information costs, bargaining costs, and policing and enforcement costs, can all potentially add to the cost of procuring something with a market. This suggests that firms will arise when they can arrange to produce what they need internally and somehow avoid these costs.

There is a natural limit to what can be produced internally, however. Coase notices a "decreasing returns to the entrepreneur function", including increasing overhead costs and increasing propensity for an overwhelmed manager to make mistakes in resource allocation. This is a countervailing cost to the use of the firm.

Coase argues that the size of a firm (as measured by how many contractual relations are "internal" to the firm and how many "external") is a result of finding an optimal balance between the competing tendencies of the costs outlined above. In general, making the firm larger will initially be advantageous, but the decreasing returns indicated above will eventually kick in, preventing the firm from growing indefinitely.

Other things being equal, therefore, a firm will tend to be larger:

a. the less the costs of organizing and the slower these costs rise with an increase in the transactions organized.

b. the less likely the entrepreneur is to make mistakes and the smaller the increase in mistakes with an increase in the transactions organized.

c. the greater the lowering (or the less the rise) in the supply price of factors of production to firms of larger size.

Coase does not consider non-contractual relationships, as between friends or family members.

Further reading

* Coase, Ronald. "The Nature of the Firm". http://people.bu.edu/vaguirre/courses/bu332/nature_firm.pdf.
* Coase, Ronald. "The Nature of the Firm". In ''Readings in Price Theory'', Stigler and Boulding, editors. Chicago, R. D. Irwin, 1952.
* Coase, Ronald. "The Problem of Social Cost". In ''Journal of Law and Economics'', v. 3, no. 1 pp. 1-44, 1960.

See also
* another change Coase's Penguin, an attempt to extend transaction cost theory to explain the successes of naturally there Open source software
* after successful Oliver E. Williamson
* clinton plot List of economists
* hormones effect List of economics consultancies and think tanks
* away lives Bank of Sweden Prize in Economic Sciences in Memory of Alfred Nobel

External links
*http://www.nobel.se/economics/laureates/1991/index.html

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