Works
- The Nature of the Firm, Economica, 1937
- The Problem of Social Cost, Journal of Law and Economics, 1960
In Tactics of Organizational Politics
Ideas
Transaction costs and the boundaries of the firm. Using the market has costs, such as finding prices and negotiating and enforcing contracts. Firms exist because directing activity by authority is sometimes cheaper, and a firm grows until organizing one more transaction inside it costs as much as buying it in the market.
Bargaining and transaction costs. If bargaining were costless, the parties affected by a harmful activity would negotiate to the efficient outcome however rights were initially assigned. Because bargaining is costly in practice, who holds the rights and how expensive it is to negotiate determine what actually happens.
What it explains
Coase explains why the cost of reaching agreement, more than the merit of a proposal, often decides whether it happens. Adding parties, blurring ownership, or raising the cost of negotiation can stall a decision indefinitely, while clear rights and few parties make one easy.
Tactics that draw on Ronald H. Coase (25)
- Approval by Nod
- Corporate Filibuster
- Data Access Paywall
- Death by Committee
- Devil in the Details
- Diffused Accountability
- Divesting a Resistant Unit
- Embrace and Smother
- Internal Patent Blockade
- Jurisdictional Ambiguity
- Martyrdom Avoidance
- MVP Shield
- Omnibus Package
- Pain Rerouting
- Parallel Body Bypass
- Pet Project Rider
- Policy by Exhaustion
- Preemptive Exit Offer
- Procurement Veto
- Rigorous Gate Review
- Selective Service Degradation
- Shadow IT Holdout
- Stakeholder Overload
- Succession Pool Dilution
- Unanimity Trap