Division of Labor, Variability, Coordination, and the Theory of Firms and Markets 124 reduction of host toxicity without

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Division of Labor, Variability, Coordination, and the Theory of Firms and Markets 124 reduction of host toxicity withoutA new approach to explaining the existence of firms and markets, focusing on variability and coordination. It stands in contrast to the emphasis on transaction costs, and on monitoring and incentive structures, which are prominent in most of the modern literature in this field. This approach, called the variability approach, allows us to: show why both the need for communication and the coordination costs increase when the division of labor increases;