The law of property determines who owns something, but the market determines how it will be used.
Ronald CoaseRead
Roughly speaking, when you are dealing with business firms operating in a competitive system, you can assume that they're going to act rationally. Why? Because someone in a firm who buys things at $10 and sells them for $8.00 isn't going to last very long in that firm.
Interpretation
What this quote means
Firms in a competitive market act rationally to survive.
The quote by Ronald Coase emphasizes that in a competitive business environment, firms are incentivized to make rational decisions in order to remain viable. If a firm consistently operates at a loss, such as buying products for $10 and selling them for $8, it will struggle to survive because rational economic behavior dictates that firms must seek profit to continue their operations effectively.
Themes
BusinessRationalityCompetitionProfitEconomics
In practice
Example use cases
During a business seminar to illustrate the importance of making wise financial decisions.
More from Ronald Coase
All quotes →During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact.
Ronald CoaseRead
We must first note that economic factors are taken into account in a world in which ignorance, prejudice, and mental confusion, encouraged rather than dispelled by the political organization, exert a strong influence on policy making.
Ronald CoaseRead
Similar quotes
If you understand cause and effect, it brings about a set of insights that leads you to a very different place. The knowledge will persuade you that the market isn't organized by customer category or by product category. If you understand the job that consumers need to complete, you can articulate all of the experiences in that job.
Clayton M. ChristensenRead
The reality is the Lean Startup method is not about cost, it is about speed. Lean startups waste less money, because they use a disciplined approach to testing new products and ideas.
Eric RiesRead
In the Machine Age, the company itself became a machine - a machine for making money.
Peter SengeRead
My own view is that every company requires a long-term view.
Jeff BezosRead
Consistent alignment of capabilities and internal processes with the customer value proposition is the core of any strategy execution.
Robert S. KaplanRead
If you go to a venture firm, what you're doing is you're buying money from them in exchange for equity. They have a commodity that they're selling and they have to differentiate themselves.
Naval RavikantRead