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So in relation to @fedenegro& #39;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& #39;t everything a pure market?
It& #39;s an explosive question. https://twitter.com/fedenegro/status/1331224355968258056">https://twitter.com/fedenegro...
Why do companies exist = why isn& #39;t everything a pure market?
It& #39;s an explosive question. https://twitter.com/fedenegro/status/1331224355968258056">https://twitter.com/fedenegro...
The problem with Coase classic theory, that firms form to reduce & #39;transaction costs& #39; ( @gordonbrander I feel we need to discuss this!) is that either
- it is too weak, ie it doesn& #39;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& #39;t explain enough
- (more likely) it is too strong, in that it should destroy the whole mkt economy!
Why would the Coase& #39;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& #39;t ... the economy more planned?
Ie why isn& #39;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 & #39;co-operate& #39; by accident. So why not by design?
It& #39;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 & #39;co-operate& #39; by accident. So why not by design?
It& #39;s all ideological.
We don& #39;t ask why & #39;groups of firms& #39; ie sectors or subsectors couldn& #39;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">https://twitter.com/fedenegro...
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">https://twitter.com/fedenegro...
If it is true, IMO it obviously is (see essay) that many new biz are & #39;asset co-ordinators& #39; (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/">https://perspectives.lastmeter.info/platforms...
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& #39;t think we have good theory here, and conventional firm/market theory is obviously confusing people.
I just don& #39;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...
