The Firm Boundary as a Channel Comparison: Organisation, Reorganisation, and the Machine Member

Why do firms exist at all, instead of buying and selling everything through the market? Coase said that using prices is itself costly. This paper treats that cost as a rate of moving information and rebuilds the firm's boundary as a simple contest between two ways to coordinate: a shared internal channel, or separate market prices. A group of tightly linked activities becomes a firm when coordinating them internally is cheaper. The same idea explains the firm's internal hierarchy, how firms reorganise and sometimes never settle, and how rising machine capability rotates the boundary towards prediction-heavy work. A reproducible illustration, plus a real input-output network, shows the mechanisms at work. It demonstrates the ideas rather than testing them, and is careful about which conclusions the data can and cannot support.