>I do have to say that the one thing law school has done for me is to help
>understand the ideology that promotes all this centralization in the name of
>free market competition and it does return us to our friend Richard
>Posner (and
>Coase). The argument is that perfect competition is only the ideal model that
>needs to include transaction costs. All the costs of negotiation and conflict
>lead to very different needs in the economy that the ideal of free
>competition.
>Once you assume transaction costs, you have to create all sorts of
>authoritarian
>top-down institutions to attain the same efficient results as perfect
>competition would accomplish with no transaction costs.
I'm no economist, thank god, but my sense is that while economists pay lip service to transaction costs, they really don't take them that seriously when theorizing. I seem to remember Coase saying that while everyone acknowledged the importance of his work, it really didn't influence the discipline that much.
Doug