AI Is Transforming the Nature of the Firm
The foundation of business strategy
Our current AI conundrum would not have been a surprise to British economist Ronald Coase. At age 26, he published his legendary essay, "The Nature of the Firm." Coase grapples with a fundamental problem: If the market is efficient, shouldn’t it be cheaper for a firm to outsource the majority of its inte
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Many internet startups of the last decade—particularly platforms—have similarly focused on reducing transaction costs through technology. They have done so in three ways:
Evan Armstrong • AI Is Transforming the Nature of the Firm
- Search and Information costs like Uber. 2. Standardizing transactions AirBnB 3. Policing and enforcement costs