Feb 26, 2013

Classic article of the day

I reread Coase's "The Nature of the Firm" (1937) this afternoon. The basic questions Coase asked are: 1) What is a firm? 2) Why do we in some cases use the price mechanism but in others the entrepreneur to allocate resources? Ronald Coase's genius was to ask apparently simple questions and to propose original answers: there is a cost of using the price mechanism. The entrepreneur and the price system are substitutes. 
[a lot has been said since then].

[There is no math in the paper . . . economics, in general, has changed a lot since then . . .]. 

Would an article like that one be published today in a major economic journals? Probably not. 

Have you wonder what kind of "basic questions" are out there that can be addressed using a Coase-type approach . . . (?) 

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