Ronald Coase

Life and ideas

Ronald Coase was born in London, studied at the London School of Economics and moved to the United States, where he taught at the University of Chicago Law School and edited the Journal of Law and Economics. His 1937 paper The Nature of the Firm asked why firms exist and answered that using the market has costs. In The Problem of Social Cost (1960) he argued that if bargaining were free of cost, the parties would reach the same efficient outcome whoever the law gave the right to, so the law should be designed to lower the costs of bargaining and to give rights to those who value them most. These insights, the Coase theorem and transaction costs, launched the field of law and economics. He was awarded the Nobel Memorial Prize in Economics in 1991 and lived to be 102.