Coase's Law

Wikipedia has quite a long description of the work of Coase's work on the theory of the firm, too long to quote here. If you're interested, you should go to Wikipedia and read that entry.

Tapscott and Williams, in their book, Wikinomics; How Mass Collaboration Changes Everything (London: Portfolio, 2006), explain this law in the context of modern life:

A firm will tend to expand until the costs of organizing a extra transaction within the firm become equal to the costs of carrying ut the same transaction on the open market. As long as it is cheaper to perform a transaction inside your firm, keep it there. But if it is cheaper to go to the market place do not try to do it internally....the Internet has caused transaction costs to plunge so steeply that it has become much moreuseful to read Coase's law, in effect, backward: Nowadays firms should shrink unti the cost of performing a transaction internally no longer exceeds the cost of performing it externally. Transaction costs stil exist, but now they're more often more onerous in corporations than in the market place. (p. 56)

Everything I do is entreprenurial. For my thoughts on Publishing and writing, go to www.kearneymusicschoolmurders.blogspot.com. For entreprenurial real estate, go to www.yourstopforrealestate.com/blog