Here are a few questions I wish yosefk.com would address:
1. Why do small companies exist? This is vice versa to his question, "Why do large firms exist?" -- if large companies have the advantage in eliminating transaction costs, small companies should be eliminated in favor of medium and large companies. (I'm taking into account Coase's "decreasing returns to the entrepreneur function.")
2. Is it possible small companies are more efficient at solving some problems -- and large companies others? For example, a large company should be better at, oh, say, contracting with the Department of Transportation for major freeway construction projects. I guess what I'm saying is: there may be an "endgame" where small companies dominate large companies (or the other way around) -- but in the here and now there's plenty of room for both. Evidenced by the fact that both types are still around, with no apparent trend eliminating either.
3. Are there any good reasons stated in the article or the Coase theorem that _don't_ involve intellectual property, for big companies to exist? (I can think of a few, but I want to hear what others have to say.) Intellectual property is so polarizing, and I'd prefer to think about Coase Theorem in different terms than it's phrased by yosefk.com.
I actually think the Coase Theorem does have the ability to predict economic outcomes, but remember that econ isn't usually about perfect predictions anyway. Econ is usually about identifying a better way to eliminate inefficiencies -- a knob to tweak, or a strategy, etc.
1. Why do small companies exist? This is vice versa to his question, "Why do large firms exist?" -- if large companies have the advantage in eliminating transaction costs, small companies should be eliminated in favor of medium and large companies. (I'm taking into account Coase's "decreasing returns to the entrepreneur function.")
2. Is it possible small companies are more efficient at solving some problems -- and large companies others? For example, a large company should be better at, oh, say, contracting with the Department of Transportation for major freeway construction projects. I guess what I'm saying is: there may be an "endgame" where small companies dominate large companies (or the other way around) -- but in the here and now there's plenty of room for both. Evidenced by the fact that both types are still around, with no apparent trend eliminating either.
3. Are there any good reasons stated in the article or the Coase theorem that _don't_ involve intellectual property, for big companies to exist? (I can think of a few, but I want to hear what others have to say.) Intellectual property is so polarizing, and I'd prefer to think about Coase Theorem in different terms than it's phrased by yosefk.com.
I actually think the Coase Theorem does have the ability to predict economic outcomes, but remember that econ isn't usually about perfect predictions anyway. Econ is usually about identifying a better way to eliminate inefficiencies -- a knob to tweak, or a strategy, etc.