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Small-Scale Question Sunday for July 28, 2024

Do you have a dumb question that you're kind of embarrassed to ask in the main thread? Is there something you're just not sure about?

This is your opportunity to ask questions. No question too simple or too silly.

Culture war topics are accepted, and proposals for a better intro post are appreciated.

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https://onlinelibrary.wiley.com/doi/full/10.1111/j.1468-0335.1937.tb00002.x

Coase's The Nature of the Firm is probably the finest exploration of why firms exist. Basically it costs a lot of money to come to an agreement, and agents within the firm can save a lot of the cost of those agreements. So optimal firm size varies with how costly those agreements are to reach.

That's what annoys me so much about Sci-Fi that dramatically changes the cost of reaching an agreement and then ignores the enormous world changing effects such a change would have on the business world (with extremely low transaction costs single person entities would probably be the most efficient firm size in a lot of industries).