5 of 5 people found the following review helpful
on 24 September 1997
Unlike other Nobel Prize winners, Coase's original papers, reprinted in this book, actually are the best sources to explain his own theory. Anyone seeking to understand the "Chicago School" of economics should read this book. To readers more familiar with the modern, more linear, writing style, however, Coase may appear to be a bit rambling at times.
1 of 1 people found the following review helpful
on 4 December 2009
I read this after getting into an argument about transaction taxes and someone said "you need to read some Ronald Coase" so I did.
The most interesting essay is on the origins of the firm. It seeks to address the question of why firms exist at all, rather than simply contractual relationships. Very simply, Coase argues that firms exist because this structure helps reduce transaction costs. Contracting with all the necessary parties is costly and time-consuming, so up to a point it is easier for operations to be brought in-house. And once you get your head around the argument, you can see that it has implications elsewhere (not sure about capital markets, but that's another story). Coase makes his case very clearly so it's not hard work.
I was less interested in the article on externalities, although again it's well-argued and made me think a bit. I like his style of writing which really does run through the logical implications of various scenarios. You might get a bit bored of hearing about ranchers and farmers, but it's ultimately a rewarding read as he exhausts the various scenarios.
The essay on the lighthouse in economics is great. He points out that although numerous writers on economics have used the lighthouse as an example of a resource that needs to be provided by the state (because no one private sector organisation has enough incentive to do it themself) actually this ignores the actual history of lighthouses.
Definitely a good read, with some interesting perspectives.