How Coase's theory of the firm helps explain the organisation of firms within the industry.
Coase believed that it was important to enquire "why co-ordination is the work of the price mechanism in one case and the entrepreneur in the other." How did Coase ultimately explain the choice between the alternatives? Using an industry of your choice illustrate how Coase's theory of the firm helps explain the organisation of firms within the industry.
In the purely theoretical study of economics the market mechanism is the core of the economic system …
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…establishment as one of the leading firms in global economics. It now commands an impressive 21 refineries, 26,800 service stations, 110,000 employees and an annual revenue in excess of $174bn.
I believe that my choice of BP illustrates how Coases theory of the firm remains both a tractable and manageable economic study even at the advent of the 21st Century more than 60 years after the essay was first conceived.
Bibliography.
The Nature of the Firm (1937). R.H Coase
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