coase   142

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The creed of speed - Time and the company
In the 1930s Ronald Coase, an economist, argued that firms existed to perform tasks that entrepreneurs were unable to do easily through markets. But another way of thinking about firms is that they are time transformers, mediating the different time horizons of customers, staff, suppliers and owners.

Bondholders, for example, want a steady stream of payments over decades, a stream derived from customers paying instantly for products that take weeks to make and transport and that are sold by staff who are employed for years. The company is the body that can satisfy all of these constituents. This capacity to straddle time frames is most extreme in banks, which raise money in the form of deposits that can be withdrawn immediately and extend that money as loans that take years to repay, an inherently risky process known as “maturity transformation”. But the transformation of time is the business of all companies, not just financial ones.
economics  coase 
10 weeks ago by gimber
Senators Are Worried About Stock Buybacks - Bloomberg
Coasean bargaining! The credibility-enhancing value of bets! Obviously it would be better if the lynxes were buying the insurance for the sheep, rather than the lynx trust buying the insurance for the sheep farmers, but that’s really the point here: Humanity is the only species that uses financial engineering to achieve mutually beneficial outcomes, go us.
insurance  coase 
february 2019 by elrob
Coase’s theory of the firm, Economics brief, Economist Jul 2017
"why are some activities directed by market forces and others by firms? His answer was that firms are a response to the high cost of using markets. It is often cheaper to direct tasks by fiat than to negotiate and enforce separate contracts for every transaction. Such “exchange costs” are low in markets for standardised goods, wrote Coase. A well-defined task can easily be put out to the market, where a contractor is paid a fixed sum for doing it. The firm comes into its own when simple contracts of this kind will not suffice."

-- what about regulation of spectrum?

"But a second paper, “The problem of social cost”, ... argued that private bargaining could resolve social problems, such as pollution, as long as property rights are well defined and transaction costs are low (they rarely are)."

"a body of more rigorous research on such questions began to flourish. Central to it was the idea that it is difficult to specify all that is required of a business relationship, so some contracts are necessarily “incomplete”. "

"pot markets are thus largely self-policing. They are well suited to simple, low-value transactions, such as buying a newspaper or taking a taxi.

Things become trickier when the parties are locked into a deal that is costly to get out of."

"Where it becomes costly for a company to specify all that it wants from a supplier, it might make sense to acquire it in order to claim the residual rights (and the profits) from ownership. But, as Messrs Grossman and Hart noted, something is also lost through the merger. The supplier’s incentive to innovate and to control costs vanishes, because he no longer owns the residual rights."

"Mr Holmstrom and Paul Milgrom established that where important tasks are hard to monitor, and where a balance of activities is needed, then a contract should shun strong incentives tied to any one task. The best approach is to pay a fixed salary and to leave the balance of tasks unspecified."
TheEconomist  economics  history  Coase  people  profile  contracting 
october 2017 by pierredv
RT : If you torture the data long enough, it will confess to anything

~ Ronald

Was born
Coase  OnThisDay  from twitter
december 2016 by emelaktas
Transaction Costs in the New Economy – WTF? - by @freecloud
"“The Internet is nothing less than an extinction-level event for the traditional firm”

Is true, but is qualified – If:

The traditional Firms cannot digitally transform themselves sufficiently to compete well enough, soon enough.
The UberFirms can avoid a levelling of employment & regulatory conditions, and afford to undercut long enough, to drive the traditional Firms out of business."
digital  disruption  strategy  airbnb  ronald  coase  tim  o'reilly  uber  wtf 
september 2015 by jonerp

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