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A Nobel Prize for Governance and Institutions: Oliver Williamson and Elinor Ostrom

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  • Peter Earl
  • Jason Potts

Abstract

This paper reviews the 2009 Nobel Prize in Economics jointly awarded to Oliver Williamson for his work on governance in organizations and the boundaries of the firm, and to Elinor Ostrom for her work on the governance of common pool resources. We review the careers and the research contributions of Williamson and Ostrom to the theory and analysis of economic institutions of governance. Both winners of this Prize for 'economic governance' are thoroughly deserved, yet like the Hayek-Myrdal Prize of 1974 their respective approaches, methods and findings are almost diametrically opposed. Williamson offers a top-down contracts-based solution to the incentive problems of opportunism in corporate governance, whereas Ostrom offers a bottom-up communication-based solution to the governance opportunities of community resources. We offer some critical comments on Williamson's analytic work and discussion of the potential for further application of Ostrom's case-study based experimental methodology. We conclude with a suggested third nominee to make better sense of how these two great scholars' works fit together, namely George Richardson.

Suggested Citation

  • Peter Earl & Jason Potts, 2011. "A Nobel Prize for Governance and Institutions: Oliver Williamson and Elinor Ostrom," Review of Political Economy, Taylor & Francis Journals, vol. 23(1), pages 1-24.
    • Handle: RePEc:taf:revpoe:v:23:y:2011:i:1:p:1-24
    DOI: 10.1080/09538259.2011.526291
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    3. McCloskey, Deirdre Nansen, 2006. "The Bourgeois Virtues," University of Chicago Press Economics Books, University of Chicago Press, number 9780226556635, April.
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    Cited by:

    1. Chanteau, Jean-Pierre & Labrousse, Agnès, 2013. "L’institutionnalisme méthodologique d’Elinor Ostrom : quelques enjeux et controverses," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 14.
    2. Tae-Hee Jo, 2016. "What If There Are No Conventional Price Mechanisms?," Journal of Economic Issues, Taylor & Francis Journals, vol. 50(2), pages 327-344, April.
    3. Bidisha Mandal & Timothy Lawrence, 2017. "Managing the Commons: How Extension Facilitates Local Participation to Manage Natural Resources," Applied Economic Perspectives and Policy, Agricultural and Applied Economics Association, vol. 39(3), pages 499-515.

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