Abstract
“It can be assumed that the distinguishing mark of the firm is the supersession of the price mechanism.” (COASE 1937:389). This is a very pragmatic position and does not mean that the existence of firms is a response to market failures. Rather “the main reason why it is profitable to establish a firm would seem to be that there is a cost of using the price mechanism.” (COASE 1937:389). In other words, the utilization of the market simply has its own costs. ALIBER (1983:248) argues that COASE has identified the motive for a firm’s growth: “Firms expand and grow because the costs of avoiding the use of the market are less than the costs of using the market.”
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© 1986 Springer-Verlag Berlin Heidelberg
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Borner, S. (1986). The Transaction Cost Approach to New Forms of International Investment (NFII). In: Internationalization of Industry. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-71422-1_8
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DOI: https://doi.org/10.1007/978-3-642-71422-1_8
Publisher Name: Springer, Berlin, Heidelberg
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