It seems therefore
possible that quire apart from the question of diminishing
returns the costs of organising certain transactions within
the firm may be greater than the costs of carrying out the
exchange transactions in the open market. This would
necessarily imply that there were exchange transactions
carried out through the price mechanism, but would it
mean that there would have to be rnore than one firm?
Clearly not, for all those areas in the economic system
Where the direction of resources was not dependent directly
on the price mechanism could be organised within one
firm. The factors which were discussed earlier would seem
to be the important ones, though it is cliihcult to say whether
“ diminishing returns to management ” or the rising supply
price of factors is likely to be the more important.