Source: David Friedman’s Substack
by David Friedman
“In my earlier post I observed that the organizational costs of hierarchical coordination become larger as the size of the firm, the number of people being coordinated, increased. It occurred to me when I was writing it that there was also a pattern to the transaction costs of market coordination, that they decreased as the size of the market, the number of alternative sellers or buyers of the good being produced, increases. I did not have my thoughts on that subject well enough worked out at that point to include them in the post, hence this postscript.” (02/12/26)