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Transaction Costs

An annotated collection of 3 books & papers on transaction costs, spanning 1937 to 1987. Featuring works by Ronald Coase, Oliver Williamson, Thomas Malone — each with editorial commentary oriented to digital product practice.

The Nature of the Firm

Ronald Coase, 1937 · Economica, Vol. 4, No. 16

The founding question: if the market is so efficient, why do firms exist? Coase answers that organising activities in the open market has costs — searching for suppliers, negotiating contracts, monitoring quality. Firms…

The Economic Institutions of Capitalism

Oliver Williamson, 1985 · The Free Press

Williamson takes Coase's intuition and turns it into a complete theory. Contracts are incomplete, people act with opportunism, and some assets are specific enough that you cannot acquire them on the open market without r…

Electronic Markets and Electronic Hierarchies

Thomas Malone, Joanne Yates & Robert Benjamin, 1987 · Communications of the ACM, Vol. 30, No. 6

The paper that connects Coase to the digital era. Information technology reduces transaction costs, and that pushes activity toward markets and away from hierarchies. When coordinating outside is cheap, firms shrink. It…