Sat Jan 25, 2003

Inside the Firm

Brad DeLong notes Sony’s internal conflicts over licensing and copy protection. The consumer electronics division sees the world differently from the entertainment division. This is a good example of why it’s not right to think, as Brink Lindsey does, that a Coasian picture of markets and firms accurately describes the social organization of the economy. Firms are not simply dictatorships established as the result of a transactions cost calculation. I wrote about this at slightly greater length a while ago, here and here.