CONCEPT
Coasean Singularity
The hypothetical endpoint where AI agents reduce transaction costs so dramatically that the economic rationale for hierarchical firms approaches zero — a condition Coase himself called "unimaginable."
The Coasean Singularity describes a limiting case in which AI-driven automation of search, bargaining, and enforcement reduces transaction costs to near-zero, eliminating the efficiency advantage that justified firms organizing production internally. In such a world, every specifiable activity could be transacted on the market, coordination could occur through algorithmic matching, and hierarchical organizations would become unnecessary overhead. Shahidi, Rusak, Manning, Fradkin, and Horton introduced the term in their 2025 NBER chapter analyzing AI's effect on organizational boundaries. The concept is theoretically coherent but practically unattainable: transaction costs will not reach zero, social functions of firms cannot be marketized, and the institutional infrastructure required for pure market coordination does not exist. The Singularity serves as an analytical boundary case — useful for thinking, impossible to reach.
In The You On AI Field Guide
Coase himself rejected the zero-transaction-cost assumption embedded in what became known as the Coase Theorem. "I never liked the Coase Theorem," he told Russ Roberts. "It's a proposition about a system in which there