1)What is the primary reason given by Coase for why it is often profitable to establish firms?

According to Ronald Coase, the most crucial basis of why it is productive to organize a firm would be that there is usually a cost associated with the use of price mechanism.

This because it is more affordable working comprehensively under one or two rules than employees separating and depending on outlying agreements. Moreover, market effectiveness comes with a cost; thus, by initiating a firm and permitting some supremacy to manage the resources, determining marketing expenditures is retained. Coase also believed that contracts could not be banished with a firm's existence, but they are significantly minimized.