The distinguishing mark of the firm is the supersession of the price mechanism.#
If we consider the operation of a sales tax, it is clear that it is a tax on market transactions and not on the same transactions organised within the firm.#
A firm, therefore, consists of the system of relationships which comes into existence when the direction of resources is dependent on an entrepreneur.#
The costs of organising and the losses through mistakes will increase with an increase in the spatial distribution of the transactions organised, in the dissimilarity of the transactions, and in the probability of changes in the relevant prices.#
It is perhaps the main achievement of economic science that it has shown that there is no reason to suppose that specialisation must lead to chaos.#
The problem which we face in dealing with actions which have harmful effects is not simply one of restraining those responsible for them. What has to be decided is whether the gain from preventing the harm is greater than the loss which would be suffered elsewhere as a result of stopping the action which produces the harm.#
The kind of situation which economists are prone to consider as requiring corrective government action is, in fact, often the result of government action.#
Nothing could be more “anti-social” than to oppose any action which causes any harm to anyone.#