We've been thinking a lot at Stripe about the Coasean lens on AI:
- The obvious near-term effect is reduced transaction costs within companies: shared context, systems of record, aligned incentives etc.
- But inter-company transaction costs also reduce sharply: agents are e it trivially easy to integrate; make contracting much more straightforward; agent-to-agent commerce.
- On net, we think second effect bigger in medium term: fewer people per firm, more output per firm, just more firms, and more coordination happening through market-like mechanisms
- The obvious near-term effect is reduced transaction costs within companies: shared context, systems of record, aligned incentives etc.
- But inter-company transaction costs also reduce sharply: agents are e it trivially easy to integrate; make contracting much more straightforward; agent-to-agent commerce.
- On net, we think second effect bigger in medium term: fewer people per firm, more output per firm, just more firms, and more coordination happening through market-like mechanisms
Apr 30, 2026 · 10:09 PM UTC
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@collision Coarse also needs Hayek. We looked at what would be needed so agents can successfully participate in a market, with @AndreyFradkin
strangeloopcanon.com/p/agent-know-t…
strangeloopcanon.com/p/agent-know-t…
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@collision Although I get what you're saying, one point of clarification - Coase originally defines 'transaction costs' as explicitly the cost of using the price mechanism/market e.g., outside the firm. He refers to the within-firm costs as coordination costs or the cost of using authority
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@collision So well said. This is the thesis behind every coordination experiment we are running.
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@collision Fully agree.
The extremal version is the agentic company: a new kind of firm, one that is purely software all the way from capital to governance to execution to property rights as self-executing code. It has lower fixed costs, higher access to capital and global investability.
The extremal version is the agentic company: a new kind of firm, one that is purely software all the way from capital to governance to execution to property rights as self-executing code. It has lower fixed costs, higher access to capital and global investability.
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COASE is the cure for UBI, Communism, Revolutionary sentiment.
Markets hav to work for everyone. And this is now spinning out of control.
Markets have to work for everyone. We can't just clone everyone from the Corpus and run humans at the speed of GPUs. That's theft. Not capitalism.
Or we can kiss markets goodbye.
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@collision possible to imagine organizations that are a cross between an open market and a company. Open Orgs align incentives around a mission, but create a marketplace for productive contributions. Anyone can bring their agent to the problem, start producing value, and gain rewards.
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@collision Inter-company transaction costs dropping is the one most people miss. When agents can negotiate, compare, and switch vendors in seconds, the switching cost moat disappears overnight.
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@collisionr decentralization of economics is an interesting idea, but doesn't AI also make companies more efficient?
The problem with central planning is the planning itself.
There are too many moving parts, and the communication and coordination overhead makes large companies slow. Doesb't AI remove that?
Doesn't AI make large companies faster and more agile while keeping their scale advantages?
If so, would that not lead to the opposite outcome, a few large companies that are extremely efficient with fewer people?
The problem with central planning is the planning itself.
There are too many moving parts, and the communication and coordination overhead makes large companies slow. Doesb't AI remove that?
Doesn't AI make large companies faster and more agile while keeping their scale advantages?
If so, would that not lead to the opposite outcome, a few large companies that are extremely efficient with fewer people?
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@collision Genuine question: if AI compresses inter-company transaction costs enough, do we end up with fewer but larger firms, or more micro-firms that can punch above their weight?
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@collision The inter-company effect is underrated. Agents discover, evaluate and integrate vendor APIs in minutes not weeks. Optimal firm size drops fast — solo operators with good agent tooling can ship what 20-person teams did in 2023.
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@collision Paper with generalized Coasean approach here: preprints.org/manuscript/202…
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@collision agents make discovery and integration cheap. trust, disputes, and liability allocation are still human-speed, and that's where most inter-firm cost actually lives.
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@collision @tylercowen When taken to its logically end state, this results in no more corporations. We’re reverting to the age of the sole entrepreneur. The blacksmith, the trader, the baker, the farmer, for a new age of autonomy and abundance.
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@collision On the second point, payments processor onboarding today takes weeks of back and forth: schemas, edge cases, cert flows. Agents handling that turns weeks into hours. The protocol layer becomes the bottleneck, not the integration.
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@traskjd @VictorTaelin @matheusmr95 I think the nearer-term effect will be to make people more productive, which makes them more valuable. Less employees per company, but far more companies (or more products/services). Even when fully replaced, AI might just query us for our deep preferences as market research.
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@collision What do you think about @btaylor's business model for Sierra, where they charge per task the agent successfully completes?
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@collision The second-order effect is massive. If agents can negotiate and transact directly between companies, friction that keeps many markets from clearing disappears. The real question: what happens to competitive moats when coordination costs approach zero?
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@collision Great talk, John! Related to my recent paper on firm entry and AI exposure: guillgall.github.io/files/firm_ent…
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@collision @Jon_Hartley_ Corporations work bc they are hierarchical, permitting coordination. The rules are what is coordinated. Rules without hierarchies can’t be enforced. Coase was off the mark, and institutional Econ followed. Paper up on SSRN.
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@collision Seeing this in B2B content now. We run LinkedIn for 30 SaaS companies — the best-performing content comes from interviewing 12 buyers, extracting their exact words, then publishing those as founder posts. AI collapses the cost of that research from weeks to hours.
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@collision @collision have you guys thought about the prospect of accelerated merge-or-exit dynamics producing ASI resembling a “network confederacy” vs a single godlike model?
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@collision @tylercowen coase missed the point. agents dismantle firms not just cut costs. markets win.
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@collision Doesn’t it ultimately result in market disintermediation? As in, distributed coordination instead of centralized? That's game over for platforms.
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@collision @patrickc in equity market, reduced index fees and commission fees has led to the majority of the market in index funds, more ETFs than stocks
How do you reconcile this with the thought of more companies? Is the index fund a firm or a market?
How do you reconcile this with the thought of more companies? Is the index fund a firm or a market?
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