Ronald Coase

Lore & Background

Coase married Marian Ruth Hartung in 1937; they were married 75 years until her death in 2012. He died in Chicago on 2 September 2013 at age 102. His work included two seminal articles: 'The Nature of the Firm' (1937), which introduced transaction costs to explain the existence and limits of firms, and 'The Problem of Social Cost' (1960), which argued that well-defined property rights could overcome externalities if not for transaction costs. Near his 100th birthday, he co-authored 'How China Became Capitalist' (2012) with Ning Wang.

Reader's Guide

Coase's significance lies in his challenge to traditional economic theory, which assumed markets were always efficient. By highlighting transaction costs—the costs of searching, bargaining, and enforcing contracts—he explained why firms exist as alternatives to market contracting. His work in 'The Problem of Social Cost' laid the foundation for the Coase theorem, showing that with clear property rights and zero transaction costs, private parties can resolve externalities without government intervention. This insight influenced law and economics, environmental policy, and organizational economics. Coase urged economists to study real-world wealth creation rather than abstract price theory, emphasizing the roles of society, history, culture, and politics. His transaction cost approach was later extended by Oliver Williamson in modern organizational economics. Coase's legacy endures in the fields of industrial organization, law and economics, and the study of institutional economics.

Did You Know?

• Coase wore leg-irons as a child and attended a school for physical defectives.
• He received the Nobel Memorial Prize in Economic Sciences in 1991.
• He was married to Marian Ruth Hartung for 75 years until her death in 2012.
• Coase co-authored 'How China Became Capitalist' with Ning Wang near his 100th birthday.

Notable Quotes (Wikiquote)

"Ronald Coase. (1972) "Industrial Organization: A Proposal for Research" — Ronald Coase "American institutionalists were not theoretical but anti-theoretical.... Without a theory they had nothing to pass on except a mass of descriptive material waiting for a theory, or a fire." — Ronald Coase "In my youth it was said that what was too silly to be said may be sung. In modern economics it may be put into mathematics." — Ronald Coase "Ronald Coase: in Reason, January 1997 (read online): About state regulation." — Ronald Coase