The Cost of Using the Market

5min Snip

00:00

Play full episode

Summary

Transcript

Episode notes

The firm itself is not a costless thing to operate. There are costs of operating a firm, I call these administrative costs. If the costs of using the market are too high at the margin, firms will emerge to reduce those costs. It's an astonishingly simple insight, but no one had it until cose discovered it. And this is a that runs throughout all ronald cos's work - he recognized when economists overlooked obvious questions.

Don Boudreaux of George Mason University and Cafe Hayek talks with EconTalk host Russ Roberts about the intellectual legacy of Ronald Coase. The conversation centers on Coase's four most important academic articles. Most of the discussion is on two of those articles, "The Nature of the Firm," which continues to influence how economists think of firms and transaction costs, and "The Problem of Social Cost," Coase's pathbreaking work on externalities.