Williamson’s research teaches us to recognize when transactions will take place within a firm and when they will take place in markets. He significantly extended Coase’s insights on reducing transactions costs by delineating the advantages of such within-firm interactions when mutual dependence between people is high. The predictions of his theory are testable and have been confirmed in many empirical studies.
Ostrom's research teaches us that “market failure” due to externalities or public goods of the kinds illustrated in Garrett Hardin’s famous "tragedy of the commons" example can be resolved by genuinely engaged individuals working together, and that government intervention may therefore not be needed to solve such market failures. Indeed she finds that individual arrangements frequently achieve better results than government intervention. In this way she too builds on the work of Coase.
Tuesday, October 13, 2009
Taylor explains the Economics Prize beautifully in these two paragraphs:
The question however that remains is: why hasn't Tullock got a Nobel yet?