Showing papers by "Oliver E. Williamson published in 1989"

The Firm, the Market, and the Law

Abstract: Few other economists have been read and cited as often as R.H. Coase has been, even though, as he admits, \"most economists have a different way of looking at economic problems and do not share my conception of the nature of our subject.\" Coase's particular interest has been that part of economic theory that deals with firms, industries, and markets—what is known as price theory or microeconomics. He has always urged his fellow economists to examine the foundations on which their theory exists, and this volume collects some of his classic articles probing those very foundations. \"The Nature of the Firm\" (1937) introduced the then-revolutionary concept of transaction costs into economic theory. \"The Problem of Social Cost\" (1960) further developed this concept, emphasizing the effect of the law on the working of the economic system. The remaining papers and new introductory essay clarify and extend Coarse's arguments and address his critics. \"These essays bear rereading. Coase's careful attention to actual institutions not only offers deep insight into economics but also provides the best argument for Coase's methodological position. The clarity of the exposition and the elegance of the style also make them a pleasure to read and a model worthy of emulation.\"—Lewis A. Kornhauser, Journal of Economic Literature Ronald H. Coase was awarded the Nobel Prize in Economic Science in 1991.

Chapter 3 Transaction cost economics

Abstract: Publisher Summary This chapter discusses the operationalization of transaction cost economics. Vertical integration, an understanding of which serves as a paradigm for helping to unpack the puzzles of complex economic organization more generally, is described in the chapter. Some empirical tests of the transaction cost hypotheses are summarized in the chapter. Transaction cost economics adopts a contractual approach to the study of economic organization. As compared with other approaches to the study of economic organization, transaction cost economics (1) is more microanalytic, (2) is more self-conscious about its behavioral assumptions, (3) introduces and develops the economic importance of asset specificity, (4) relies more on comparative institutional analysis, (5) regards the business firm as a governance structure rather than a production function, (6) places greater weight on the ex post institutions of contract, with special emphasis on private ordering, and (7) works out of a combined law, economics, and organization perspective. Friction, the economic counterpart for which is transaction costs, is pervasive in both physical and economic systems.