The paper "Nature of Firms" from Coase is so difficult to understand.
Would anyone try to explain/extract all the ideas from that paper
about Coase on conception of a firm for easy understanding?

Thanks, either self explaination or any exisiting online source (like
Lecture note, article) or both is fine.
Please answer in few hours.

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Request for Question Clarification by pafalafa-ga on 22 May 2005 05:58 PDT

Here's a pretty good overview of Coase's main papers (including, of
course, the Nature of Firms) from none other than the Federal Reserve
Bank:


http://www.dallasfed.org/research/ei/ei0303.pdf


Have a look, and then let me know if this is the sort of explanatory
information you were after, and what else you might need to make for a
complete answer here.


pafalafa-ga

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Clarification of Question by rndgroup-ga on 22 May 2005 06:15 PDT

Thanks pafalafa,

it is a good extract of the article, but his theory is difficult to
understand, for example, "Outside the firm, price movements direct
production, which is co-ordinated through a series of exchange
transactions on the market." What is meant by exchange transaction?

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Request for Question Clarification by pafalafa-ga on 22 May 2005 08:15 PDT

Here's another overview, about halfway down the page:


http://www.absoluteastronomy.com/encyclopedia/R/Ro/Ronald_Coase.htm


(although why it's on an astronomy website is a bit of a mystery!)


Basically, Coase was asking why have firms at all?...why not just have
zillions of people working independently who contract with one another
when they need a certain skill or product?

He was looking at the 'transaction costs' -- the amount of time,
effort and resources that goes into, e.g., finding the right person,
negotiating a deal, etc.  If these costs are high enough, then it
makes sense to have certain skills in-house to avoid such costs.  That
is, it makes sense to hire employees and start a firm.

I believe "exhange transaction" is just a generic term referring to
any type of market-place exchange of goods or services -- buying a
product, hiring labor, and so on.

Does that help?


paf

Thank you for the question, Rndgroup, and to you, Pafalafa, for the link.
That was very interesting reading and food for thought about German
politics (Green and Socialist for the last few years) and also about
Daimler-Chrysler (the column about the size of companies).
I was expecially delighted to discover that one economist has really
complained about all the theorists in the field who want the world to
conform to their ideas.
:-)
Thanks,
Myoarin