Managerial Economics 2nd Edition by William Boyes

Exercise 24

British economist Ronald Coase laid out the basic logic of the managed corporation in his 1937 work, The Nature of the Firm. He argued that corporations were necessary because of what he called "transaction costs." It was simply too complicated and too costly to search for and find the right worker at the right moment for any given task, or to search for supplies, or to renegotiate prices, police performance, and protect trade secrets in an open marketplace. The corporation might not be as good at allocating labor and capital as the marketplace; it made up for those weaknesses by reducing transaction costs. What implications does Wikipedia have for this view of the firm?