Max Sawicky writes: >> Coincidently I'm reading Oliver Williamson at the moment, >> whose existence and inspired lit debunks your assertion. >> >> Transactions costs can make hierarchy (the firm) more economical >> than market exchange.
I am not sure I understand the significance of this. If I want to acquire a widget, what difference does it make at a theoretical level whether I acquire the widget by contracting pursuant to a purchase agreement (market exchange) or employment agreement (hierarchical firm)? I understand why transaction costs would influence how I acquired the widget, but what is the significance for neoclassical economics (or a critique of neclassical economics)? David Shemano
