economic agents

Williamson (1981) argued that organizations are formed to save economic agents from incurring unneeded transaction costs. Because there are different types of transactions there are different types of organizations. He also argued that œorganization theory undergirds the theory of the firm-as-governance structure (Williamson, 2000, p.1). In The nature of the firm Coase (1937) talked about structures in existence to coordinate production. Why do firms exist? Critically analyse the benefits from their existence.

Remember that you should not simply reiterate Williamson’s and Coases’ arguments. A descriptive overview of the arguments will not be enough. To critically analyse requires that you look into the arguments in depth you break them in parts and clarify their components and that you support your analysis with supportive arguments and additional resources. Whenever possible, you should provide examples to support your analysis.


Coase, R.H. (1937) œThe nature of the firm Economica, 4(16), pp. 386-405 [Attached as "Week 1 reading material 1"]

Williamson, O.E. (1981) œThe economics of organization: The transaction cost approach, American Journal of Sociology, 87(3), pp. 548-577 [Attached as "Week 1 reading material 2"]

Williamson, O.E. (2000) œWhy law, economics, and organization? UC Berkley Public Law Research Paper No. 37 [Attached as "Week 1 reading material 3"]