US: Ronald Coase, famed economist, Nobel Laureate, dies at 102

Ronald Coase, the founder of the Coase Theorem and one of the most significant contributors to modern economic theory, died last Monday. He was 102.

Coase may be best known for his Coase Theorem, which says externalities can be dealt with by the individuals involved without outside intervention from, for example, the government.

One example of this theorem says that rather than requiring an authority to prevent passengers sitting in front of you on an airplane from reclining, thereby reducing your leg space, you can pay that passenger not to recline. If that passenger values the payment more than his ability to recline, then he will not recline. Coase said his theorem was developed from the 1960 paper “The Problem of Social Cost.”

His other significant contribution was published in 1937, when he was just 26, entitled “The Nature of the Firm.” This earlier paper explores why and when individuals form companies, and why they develop into large or small ones.

Coase won the Nobel Price for Economics in 1991 for the “discover and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.”

Full Content: Business Insider

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