Transaction costs are the main reason for organising production within firms rather than using the market.

Question

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Transaction costs, such as those for searching for information, negotiating, and enforcing contracts, can be high when using the market. Organizing production within firms can reduce these costs, making it a key reason for firms to exist according to the theory of the firm, particularly as outlined by Ronald Coase in his work on transaction cost economics.

Transaction Costs Are the Main Reason for Organising Production Within