How do transaction costs justify the existence of firms

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Transaction costs are expenses incurred when buying or selling a good or service. While, The firm is a central institution in the functioning of any economic system in which people meet their needs through the division of labor, cooperative production, and the exchange of goods and services. Firms take the form of a legal entity with its own trade name. In simplest answer, how do transaction costs justify the existence of firms?

Reference no: EM133132423

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