Monday, October 12, 2009

Transaction costs rule!

Or govern. Elinor Ostrom and Oliver Williamson have been announced as this year's winners of the Nobel Prize in Economics, and we at Unforeseen Contingencies heartily endorse these choices. Both of them are leading exponents of the New Institutional Economics, a "school" whose rise is the most hopeful development in today's economics.

For quite some time I've thought Williamson should receive the prize, but feared he wouldn't, since Ronald Coase and Douglass North already had for their work in related areas. Still, Williamson was a name I mentioned as a distinct possibility and deserving candidate whenever I was asked about who might be a future winner.

Elinor Ostrom was a pleasant surprise. I would not have predicted her, but I think she's quite deserving as well. I reference work that she and others have done whenever I teach economics of common property - a subject that gets at least a passing mention in more than half the subjects I teach. And as well, she's from Indiana University, home of a number of my colleagues when I taught in Ukraine (some of whom did some work with her). I imagine they are whooping and hollering with joy.

We at Unforeseen Contingencies are too, and we tip our hats in salute to the Swedes for choosing deserving winners!

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