Ronald Coase's study, "The Nature of the Firm, " argued that

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Coase's study argued that firms are formed in order to take advantage of the fact that hierarchies can be more efficient than markets in certain situations. This is known as the "transaction cost theory," which suggests that firms exist to minimize transaction costs (such as the costs of finding a suitable trading partner, negotiating a contract, and enforcing it) that would otherwise be incurred in a market exchange.

Ronald Coase's Study, "The Nature of the Firm, " Argued