How Will LLMs Change the Structure of Firms? Coasean Transaction Costs, Grossman-Hart-Moore Property Rights, Garicano's Knowledge Hierarchies, Span of Control, and Make-vs-Buy Boundaries

Deep End Era. Engineering with Sankalp · Oct 29, 2026 · 1h 11m

When a twenty-one-year-old Ronald Coase asked why the economy is not run as one giant firm or as millions of solo contractors trading on spot markets, his answer was transaction costs: the cost of discovering prices, negotiating contracts, and coordinating exceptions. Nearly ninety years later, large language models slash both the cost of external contracting and the internal cost of acquiring and routing specialized knowledge. To figure out whether firms will shrink into five-person API orchestrators or swell into data monopolies, we walk through Coase, Williamson, Grossman-Hart-Moore…