Thursday, April 24, 2003

I've been reading a book called The Nature of the Firm: Origins, Evolution, and Development, which is a collection of essays/lectures presented at a conference on the 50th anniversary of Ronald Coase's classic paper "The Nature of the Firm" (originally written when he was 21!). The book begins with a few essays by Coase on the meaning and influence of his paper. At page 62, he writes this sentence:
Transaction costs were used in the one case to show that if they are not included in the analysis, the firm has no purpose, while in the other I showed, as I thought, that if transaction costs were not introduced into the analysis, for the range of problems considered, the law had no purpose.
If you wanted a one-sentence summary of Coase's entire body of work, you could hardly do better than that.


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