<i>A Flickr developer’s tale of how Yahoo continually tied up development at the photo-sharing service is a perfect example: 85 percent of the unit’s time was spent dealing with the Yahoo bureaucracy</i><p>When large companies have an economic advantage, it's because certain transaction costs are lowered within the organization. These lower transaction costs can be used to competitive advantage when producing products for external markets.<p>There seems to be a strong tendency for this to break down when establishing new patterns of transactions. Why? Why don't companies give the same transaction cost advantages to entrepreneurs operating inside?