Vacations in the united states for NORTH (1979) contributed one of the more important theories of the state in this vein. North sees the state very much as an organization such as the firm, and as Coase asserted (1937) in another seminal paper, the firm is a mechanism that solves the exchange problem when transaction costs are high. North (1981) defines the state as an organization with comparative advantage in violence, extending over a geographic area whose boundaries are determined by its power to tax constituents. The ruler in this geographic area has a monopoly as far as government is concerned but the ruler is constrained by threats of new order, opportunistic behavior of the agents of the state, and measurement costs. North clearly incorporates the transaction costs involved with the operation of a variety of organizations including the firm. One can almost picture the state as a large encompassing organization structured like a firm and created to minimize transaction costs. Hobbes, in Leviathan, asserts the necessity of government and the state emerges as a struggle for power in which the strong win and get to govern. Vacations in the united states 2016.