Firm As A Coherent Organization For Transaction Of Human Capital Usufruct

Following Coase's idea, we define the firm as a coherent organization for transaction of human capital usufruct. In firm authority relation substitutes price mechanism, and it reduces transaction costs because of "organizational coherence". In our opinion, firm is a kind of coherent contract, while market is not. Organizational coherence links key employers to firm tightly. Firm has a lower critical transaction efficiency than market, owing to organizational coherence. The boundary of firm is limited by transaction cost and organizational coherence.