Compare and contrast Coase and Simon on theoretical puzzle of why firms (i.e. organizations) exist. What does Robertson's image "islands of conscious power in this ocean of unconscious co-operation" (quoted p. 388) mean? [It should be clear to you that the "islands of conscious power" in this metaphor are identical to the "green areas" in Simon's metaphor (p. 27) and the "ocean of unconscious co-operation" corresponds to Simon's network of red lines. But you need to explain what is "unconscious" about this network of contracts, since people and firms making contracts certainly do so consciously! Why does Simon think that bureaucracies and markets have more in common than Hayek might suggest?

R. Coase (1937) "The nature of the firm"Economica14 (16): 386-405

Herbert Simon (1991) "Organizations and markets"The Journal of Economic Perspectives, 5(2): 25-44