I apologize in advance if this is a case of reading too much into something. But, upon reviewing an intermediate micro textbook, I found the following perplexing,
…[S]top for a minute and ask yourself whether we really need firms to produce the goods and services that we consume regularly. This was the question raised by Ronald Coase in a famous 1937 article: If markets work so well in allocating resources, why do we need firms?
— Robert S. Pindyck and Daniel L. Rubinfeld, Microeconomics (Upper Saddle River: Pearson, 2013), p. 203.
Actually, it may be an issue of not reading enough into it (especially considering it within the context of the paper it cites). But, doesn’t that question, by itself, seem odd? Firms are part of the market, and therefore part of that process of allocation. Statements like that are similar to the one made by Stiglitz in an excerpt I quoted yesterday. The process of resource allocation doesn’t exist independent of the institutions that give rise to it.
Of course, if you continue down the page of the textbook I’m excerpting, the authors explain the basic advantage of the firm very well: coordination.