Nobel Prize 2009

The Nobel Prize in economics has been awarded to Elinor Ostrom and Oliver Williamson. The academy offers a statement for the public on the significance of the research, which can be found here, and a more detailed paper on the significance meant more for economists, which can be found here. Ostrom is the first woman to win the prize in economics. (I was surprised in the early years that Joan Robinson never won since she was a big name from the 1930s and 1940s. But, she died and the award is not made posthumously.)



The two economists are linked in that their work relates to property rights/transaction costs approaches to economic analysis. Williamson worked on the firm as an institution and Ostrom worked on open-access property and communal property-rights regimes. I am a little disappointed in Williamson. His work is in the same field as Ronald Coase, but I always felt Willamson's work was not at the same level as Coase's work. His focus on post-contractual opportunistic behavior strikes me as inadequate as a basis of firm governance. I saw Williamson present a paper once while I was at UCLA, and he used more "you knows" in his talk than I have ever heard from an educated person. But, I am in the minority among industrial organization economists in my regards of Williamson. Ostrom is a good choice. She has done important work on property rights, and helped change the landscape. When I first taught about property rights, I talked about three types of systems--private, public, and communal. Today I talk about four types--private, public, communal and open access. Hardin's "The Tragedy of the Commons" should be called "The Tragedy of the Open-Access Property Rights Regime." (I know it doesn't have the same ring to it.) But there are assets owned by communities that manage to limit access of one another and to prevent use by those outside the community. Open-access property is truly available to all and no one can be prohibited from using it. The problems associated with over use are greater for the latter. The supreme example today is global climate change.