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So in relation to @fedenegro's careful framing of new vertical companies, I am always reminded of how exasperating economic theory is when you ask basic questions of fundamental premises.
Why do companies exist = why isn't everything a pure market?
It's an explosive question. https://twitter.com/fedenegro/status/1331224355968258056
Why do companies exist = why isn't everything a pure market?
It's an explosive question. https://twitter.com/fedenegro/status/1331224355968258056
The problem with Coase classic theory, that firms form to reduce 'transaction costs' ( @gordonbrander I feel we need to discuss this!) is that either
- it is too weak, ie it doesn't explain enough
- (more likely) it is too strong, in that it should destroy the whole mkt economy!
- it is too weak, ie it doesn't explain enough
- (more likely) it is too strong, in that it should destroy the whole mkt economy!
Why would the Coase's Theory of the Firm destroy the market economy? Well, because, if transaction costs can be reduced in SOME cases by CO-ORDINATION THAT IS NOT PART OF THE PRICE MECHANISM ... why not in ... all or most cases?!!
Ie why isn't ... the economy more planned?
Ie why isn't ... the economy more planned?
A more planned economy is far from a total command economy, for sure.
Particularly in sectors that are not liquid at all, ie where competition is limited or market entry is hard etc.
These sectors already 'co-operate' by accident. So why not by design?
It's all ideological.
Particularly in sectors that are not liquid at all, ie where competition is limited or market entry is hard etc.
These sectors already 'co-operate' by accident. So why not by design?
It's all ideological.
We don't ask why 'groups of firms' ie sectors or subsectors couldn't be MORE EFFICIENT through firm-like co-ordination because the childish ideology of competition is just a mental habit that is far too easy to pursue and peddle.
We should take Coase seriously! Or dump him.
We should take Coase seriously! Or dump him.
What @fedenegro is referring to (and I think partly building; I am also building something with related dynamics) is ... the role of the internet in this question.
What is a platform co (or what Fed calls a vertical co that co-ordinates) in this context? https://twitter.com/fedenegro/status/1331224355968258056?s=20
What is a platform co (or what Fed calls a vertical co that co-ordinates) in this context? https://twitter.com/fedenegro/status/1331224355968258056?s=20
If it is true, IMO it obviously is (see essay) that many new biz are 'asset co-ordinators' (taking all types of assets as linkage eg production capacity even markets) then Coase-thinking has ... broken out of the cage, and competition needs a new role? https://perspectives.lastmeter.info/platforms-all-around/
All this touches on some of the platform co biz dynamics that @Post_Market critiques and marketplace dynamics that eg @chriscantino talks up a lot.
I just don't think we have good theory here, and conventional firm/market theory is obviously confusing people.
I just don't think we have good theory here, and conventional firm/market theory is obviously confusing people.
This is the point @gordonbrander where I feel we should be discussing in terms of
- local vs global maxima
- unknown parameters and domains in phase space (maxima that need creating)
- formal descriptions of incentives + processes
- etc
but econ is way too shit for that...
- local vs global maxima
- unknown parameters and domains in phase space (maxima that need creating)
- formal descriptions of incentives + processes
- etc
but econ is way too shit for that...
