Comment by mitthrowaway2

Right, but pertinent to the pencil example, there can indeed be a single company that makes everything from the brass ferrules and the machines that stamp them, to the rubber and the graphite and the wood, coordinating all of the people involved, with the market mechanisms only acting at the periphery. And often this ends up being a cheaper and more efficient way to coordinate the people involved in pencilmaking than rival ferrule-salesmen independently pitching their brass ferrules in a market, and soliciting unaffiliated day-laborers to run their presses, because of the significant savings on transaction costs.