Essential Ronald Coase, The (Essential Scholars)

Ronald Coase (1910-2013) was one of the most influential economists of the 20th century. His influence is due largely to two publications, the only two cited in the announcement of his Nobel Prize: “The Nature of the Firm” (1937) and “The Problem of Social Cost” (1960). These two articles are among the most-cited works in economics. The ideas Coase developed in these two works led to entirely new fields of inquiry in economics, law, management, and political science, and in conjunction with his article on using markets to allocate radio spectrum (Coase 1959), spawned new market design theory and practice that helped to transform our society and enable innovation and digitization. Coase’s style of theory, analysis, and persuasion was narrative, fact-driven, and much less formal than is the norm in economics. Coase spent his career asking deceptively simple questions that revealed profound complexities in the arrangement of economic activity. Why do firms exist? Why don’t we allocate scarce resources such as radio spectrum by using markets instead of regulation? Can people resolve conflicts over resource use through bargaining and contracts, or is government regulation necessary? Is a lighthouse a public good that requires government provision? How does a durable goods monopolist price its output? Ronald Harry Coase was born in Willesden, a London suburb, on December 29, 1910. While attending the University of London, from which he graduated with a Bachelor of Commerce degree in 1932, Coase was awarded the Sir Ernest Cassell Travelling Scholarship. This scholarship enabled him to travel to the United States, study at the University of Chicago from 1931 to 1932 with Frank Knight and Jacob Viner, and visit several factories to learn how they organized production. In particular, his visits to Ford and General Motors factories provided an empirical foundation for his first paper, “The Nature of the Firm” (1937).