If firms exist to reduce transaction costs, why do they not grow indefinitely until the economy is one big company? Conversely, if "one big company is inefficient, why are there companies at all? How would Coase go about answering those questions, and what insight might his answer provide regarding when companies will tend to vertically integrate versus when they will tend to outsource? Compare Coase's explanation for hierarchy with Marglin (who mentions Coase in footnote 46 of the paper assigned unit 13).

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

. M June 28[panel4]Explaining industrialization III: organization, technology and class conflict

S. Marglin (1974)"What do bosses do?: The origin and function of hierarchy in capitalist production"Review of Radical Political Economics6: 60