Recent PostsCTN Issue: December 2016 Thomas Hazlett & Michael Honig, The Price of Freedom: How to Charge for Spectrum as WiFi and Cellular Collide IEEE ComSoc Technology News (Dec. 2016) Al[...]Thomas Hazlett recently reviewed two new volumes on the Information Economy for the International Journal of Economics of Business. Both Martin Campbell-Kelly and Daniel D. Garcia-Swartz, [...]My new research shows that more Internet access funding doesn't help students. And almost all U.S. schools are already online. By Thomas Hazlett 08/23/16 09:27 AM EDT Even during[...]How an early telephone silencer took on AT&T. By Lauren Young via Atlas Obscura It's not unusual today to overhear strangers' intimate phone conversations while comm[...]
Competence as a Random Variable: One More Tribute to Ronald Coase
Coase Conference: Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase, University of Chicago Law School. Richard A. Epstein, James Parker Hall Distinguished Service Professor of Law at the University of Chicago.
The work of Ronald Coase is notable for how it introduces the notion of transactions costs to explain both the creation and maintenance of firms and for understanding the larger question of social costs. Nonetheless, it seems improbable that positive transaction costs are the only explanation as to why and how firms are organized. A richer account of the problem properly stresses that differences in individual levels of competence, as well as individual variations on matters of temperament and taste, which help to explain why, for example, some firms are organized as partnerships and others as straight employment arrangements, with many permutations in between. The stress on differential levels of competence also helps to improve the understanding not only in related areas such as employment discrimination law, but also in more distant areas such as capital markets and tort liability.
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