His argument is based on the shared benefits of the specific knowledge that is distributed among many people in the economy. Since the economic decisions in a market system are decentralized to individuals who are likely to take advantage of the specific knowledge. An important advantage of the price system that is stressed by Heyek is that prices economize on the costs of transferring information to coordinate decisions. Central planning often fails because important specific knowledge is not incorporated in the planning process. Effective firms link specific knowledge and decision making authority and provide incentive for productive use of this information.
Firms exist because of the contracting costs of using markets.
However, organizing transactions within firms also involve costs.