According to Ronald Coase, firms emerge when:

Question

​According to Ronald Coase, firms emerge when:

Quizplus · Accepted Answer

Ronald Coase's theory of the firm suggests that firms emerge when transaction costs in the market are more than the cost of hierarchical control. This means that firms can internalize transactions that would otherwise be too costly to undertake in the market, by organizing production within a hierarchical structure. In other words, the costs of coordinating and monitoring contracts and transactions in the market may be greater than the costs of managing those same activities within a firm.

​According to Ronald Coase, Firms Emerge When

According to Ronald Coase, Firms Emerge When