He was a British economist based in the United States. He was the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School. After studying with the University of London External Programme in 1927–29, Coase entered the London School of Economics, where he took courses with Arnold Plant. He received the Nobel Memorial Prize in Economics in 1991.
Coase is best known for two articles in particular: “The Nature of the Firm” (1937), which introduces the concept of transaction costs to explain the nature and limits of firms, and “The Problem of Social Cost” (1960), which suggests that well-defined property rights could overcome the problems of externalities (see Coase Theorem). “How China became capitalist” (Cato Policy Report (Januray/February 2013) … continue reading
In memoriam Ronald H. Coase
Ronald H. Coase, Founding Scholar in Law and Economics, 1910-2013
By Sarah Galer and Jeremy Manier
Coase, who spent most of his academic career at the University of Chicago Law School, died at the age of 102 on Sept. 2 at St. Joseph’s Hospital in Chicago. He was believed to be the oldest living Nobel laureate.
Coase, the Clifton R. Musser Professor Emeritus of Economics, is best known for his 1937 paper, “The Nature of the Firm,” which offered groundbreaking insights about why firms exist and established the field of transaction cost economics, and “The Problem of Social Cost,” published in 1961, which is widely considered to be the seminal work in the field of law and economics. The latter set out what is now known as the Coase Theorem, which holds that under conditions of perfect competition, private and social costs are equal.
“That Ronald Coase is among the most influential and best-cited economists in the past 50 years is not debatable,” said Law School Professor Emeritus William M. Landes and Sonia Lahr-Pastor, JD ’13, in “Measuring Coase’s Influence.” They presented the paper at a 2009 conference titled “Markets, Firms and Property Rights: A Celebration of the Research of Ronald Coase.”
“Among the highest aspirations of the University of Chicago is the drive to create new fields of study that change our world for the better,” said University of Chicago President Robert J. Zimmer. “Ronald Coase embodied that ideal. His groundbreaking scholarship made impacts on law and policy that people around the globe continue to feel today. As a scholar, a colleague and a mentor, his historic contributions enriched our intellectual community and the world at large.”
“Ronald Coase achieved what most academics can only dream of – immortality,” said Michael H. Schill, dean of the University of Chicago Law School. “His scholarship fundamentally changed the way lawyers approach issues of when and how government should intervene in the economy, and when and how private contracts should govern. His work could not be more relevant to many of the debates we are enmeshed in today.
“Our great law school has contributed much to the world of law and jurisprudence,” Schill said. “Ronald’s contributions were among the most important.”
His intellectual impact continued late into his life, when at the age of 101, he published his final book, How China Became Capitalist, co-authored with former student Ning Wang, PhD’02.
Coase’s enduring legacy at the University of Chicago is reflected in the Law School’s Coase-Sandor Institute for Law and Economics, named in honor of Coase and donors Richard and Ellen Sandor, who gave UChicago $10 million in support of law and economics scholarship.
“Ronald Coase inspired a new way of thinking about law and about the application of economics,” said Omri Ben-Shahar, the Leo and Eileen Herzel Professor of Law and Kearney Director of the Coase-Sandor Institute. “His insights are simple but at the same time profound. They are accessible to first-year students, and their implications continue to provoke cutting-edge research. We will continue to develop the field that he inspired, and to build on the vitality of his ideas.”
“Professor Coase’s research on property rights provided the academic underpinning for the establishment of the Acid Rain Program in the United States in the early 1990s, which virtually eliminated acid rain pollution in America,” said Richard Sandor, chairman and chief executive officer of Environmental Financial Products, LLC. “Personally, he has been a source of inspiration and mentoring to me for over 40 years. Professor Coase provided me with unwavering intellectual support to carry on my ideas as both an academic and a practitioner.
“The Coase-Sandor Institute for Law and Economics at the University of Chicago will continue to support and expand Coase’s legacy in areas such as the environment, health care and education,” Sandor said.
A ‘lucky chance’ leads to economics
Coase graduated from the London School of Economics with a B.Com. in economics in 1932 after spending his final year of studies in the United States on a Sir Ernest Cassel Traveling Scholarship. During that year abroad, he focused on the structure of American automotive industry and why some work was performed inside firms and some by the marketplace. These ideas became the basis of “The Nature of the Firm.”
Sir Arnold Plant, a British economist at the London School of Economics, was a major influence on Coase while he was a student there. Until meeting him in his senior year, Coase had never taken an economics course, only accounting and business. Plant introduced Coase to Adam Smith’s “invisible hand” and to the idea that competitive economic systems could be coordinated by the pricing system. In an autobiographical essay written for the Nobel organization, Coase writes that Plant “changed my life,” influencing his ideas, helping his achieve the Cassel Traveling Scholarship and setting him on the path to becoming an economist.
“My life has been a lucky chance at all points,” Coase said in a 2012 interview with the UChicago News Office.
Coase believed the incentives of private parties to resolve disputes in their own best interests, even if there needs to be adjudication by courts, should result in an efficient, mutually beneficial solution that is always preferable to government intervention. This theory, known as the Coase Theorem, has been applied to such issues as the sale of rights to broadcast on portions of the electromagnetic spectrum and the problem of pollution; while countless other economists have applied it to virtually every area of human activity.