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Monday, October 12, 2009

It's Ostrom and Williamson

The Royal Bank of Sweden announced the winners of their Nobel Memorial Prize in Economics this morning, and they are Elinor Ostrom (Indiana University) and Oliver Williamson (University of California--Berkeley). Here's what the New York Times has to say:

In its announcement, the committee said Ms. Ostrom “has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories.”

Mr. Williamson’s research, the committee said, found that “when market competition is limited, firms are better suited for conflict resolution than markets.”

Addemdum 1:
This, from John Nye's comments on Ostrom (see the link below), is, I think, particularly important: "...creating and accessing markets is often quite costly and hence organization, hierarchy and collective agreement can, under the right conditions, serve as viable or even superior alternatives to market competition." One could say similar things about Williamson's work on corporate structure and governance.

This award probably surprises a lot of people, but it seems to me to be an interesting and deserved one,

Addendum 2:
Somewhere, I read a prediction that economists would be disturbed by Ostrom's share of the prize, because she is a political scientist. Yet that has clearly not been the case, largely, I think, because many economists know and use her work routinely (see some of the appreciations below).

Addendum 3:
Here's Alex Tabarrok's take on Williamson and on Ostrom at Marginal Revolution.
Paul Krugman at the New York Times on the prizes.
Peter Klein at Organizations and Markets promises more comment to come.
Steven Levitt (the Freakonomics guy) chimes in at the Times.
Henry Farrell, a political scientist, comments at Crooked Timber.
And another set from Marginal Revolution, Tyler Cowen on Ostrom and Williamson.
John Nye provides more insights.
Paul Romer (himself a possible winner, sometime), adds this.
Vernon Smith's views are here.
Add in David Henderson, writing in the Wall Street Journal.
Peter Klein gets around to it (at Organizations and Markets).
Nobelist Michael Spence parses the awards.

Addendum 4:
Justin Fox informs us that "...I can report that this means Williamson now gets the most coveted possession in Berkeley: his own free campus parking spot..."


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