Building blocks

Building materials 2

This section of the site describes building blocks that will help the reader understand the model described in the Key Ingredients section of the site.

The first of these building blocks consists of ways of describing how firms relate external markets, drawn both from theoretical economics and from the practical world of marketing strategy.

The second building block is the theory of transaction cost economics and market failure, which helps explain why people operate within organisations for much of the time rather than conduct their lives entirely through independent transactions.

The final building block describes the different sanctions available for conducting transactions, which helps understand how the model extends beyond the narrowly defined commercial firm in it its commercial dealings and is applicable to non-commercial organisations and to transactions that do not involve cash.