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Ostrom & Williamson

I have been teaching undergraduate courses in microeconomics and environmental economics for more years than I will admit to.  In microeconomics my thinking, in the main, is a refined version of what I learnt as an undergraduate.  The main distinctive new feature of the theory for me stemmed from the work of Ronald Coase and then Oliver Williamson on firms. This  substantially changed the way I think about the world. In environmental economics the most interesting work I did myself was on developing country forestry – the distinction between open access and common property regimes became vividly clear to me. This distinction has been the basis of the work since the 1970s of  Elinor Ostrom.  Both Williamson and Ostrom won the 2009 Nobel Prize for their institutionalist work as applied to issues of economic governance. For Williamson the prize was for drawing a clear line between activities carried out within firms and activities that were outsourced  – the distinction defines a firm in terms of its organisation.   For Ostrom I think the prize was for the way she showed common pool resources sometimes could and sometimes could not be successfully managed as common property contrary to prevailing views that they should be either privatised or run as centrally-managed resources.

For some reason I missed this interview with both Ostrom and Williamson that was made shortly after the 2009 awards.  If you have 52 minutes it is great viewing.

1 comment to Ostrom & Williamson

  • Jim Rose

    A Nepalese mate, when he was a kid, worked on one of those hand-built tiny dams that Ostrom highlighted as solutions to common pool problems in her studies.

    The village elders mediated disputes over water access.

    Everyone was needed to build the dam, so being nice was the best repeated interaction strategy. The make-shift dam might also be an example of a weakest shot public good.

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