260903: Markets and Megacorps
OK, canonical Coase theory: firms exist because some transactions are cheaper to coordinate internally than to negotiate in a market. (Markets have higher coordination costs than firms, but lower production costs.) In the 80s, accordingly, there were predictions that the Internet, by lowering coordination costs, would cause firms to shrink and become markets. But instead, we got megacorps: Walmart, Amazon, Zara. Even bigger castles, rather than decentralized networks. This is surprising!