Ronald Coase
Economist who explained why firms exist and how property rights matter.
Ronald Harry Coase was a British economist and author whose work fundamentally altered the study of firms, markets, and legal institutions. Born in Willesden, London, on 29 December 1910, he overcame a childhood physical disability that required leg-irons and attended a school for physical defectives before winning a scholarship to Kilburn Grammar School. He went on to the London School of Economics, earning a Bachelor of Commerce degree in 1932 after studying under Arnold Plant. A travelling scholarship took him to the University of Chicago in 1931–1932, where he encountered Frank Knight and Jacob Viner. Coase began his academic career as an assistant lecturer in Dundee and later Liverpool, before returning to the London School of Economics as a faculty member until 1951, when he received an earned doctorate. He then moved to the United States, retaining his British citizenship, and taught at the University at Buffalo and the University of Virginia before settling at the University of Chicago in 1964. There he became the Clifton R. Musser Professor of Economics at the Law School and co-editor of the Journal of Law and Economics. Coase believed economists should study real-world wealth creation rather than abstract price theory, arguing that the field should not ignore society, history, culture, and politics. He is best known for two articles: "The Nature of the Firm" (1937), which introduced transaction costs to explain why firms exist, and "The Problem of Social Cost" (1960), which argued that well-defined property rights could resolve externalities if transaction costs were absent—a principle later known as the Coase theorem. His transaction cost approach was later influential in modern organizational economics. Coase married Marian Ruth Hartung in 1937, and they remained together for 75 years until her death in 2012. He died in Chicago on 2 September 2013 at age 102.
- born
- 29 December 1910, Willesden, London
- died
- 2 September 2013, Chicago, Illinois
- field
- Economics
- nationality
- British
- known_for
- Transaction costs, Coase theorem, 'The Nature of the Firm', 'The Problem of Social Cost'
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
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