Knowra Ronald Coase Ronald Coase Ronald Coase (1910–2013) was a British-born economist whose analysis of transaction costs, firms, and property rights reshaped economics and legal scholarship.
Transaction cost : A cost of arranging, carrying out, or enforcing an exchange beyond the price paid for the good or service. Coase used these costs to explain why economic activity sometimes moves inside firms.
Theory of the firm : The study of why firms exist, how they are organized, and where their boundaries lie. Coase offered a transaction-cost explanation for firms replacing market contracting.
London School of Economics : A public research university in London, founded in 1895 and known for social science education and research. Coase studied there and encountered the institutional economics that informed his work.
Law and economics : An approach that uses economic reasoning to analyze legal rules, institutions, and behavior. Coase’s analysis of rights and social cost became a foundation for the field.
Externality : A cost or benefit of an activity that affects people not directly involved in its exchange. Coase reframed externalities as conflicts among users of scarce resources.
Property right : A legally or socially recognized entitlement to use, control, transfer, or exclude others from a resource. Coasean analysis asks how assigning rights shapes bargaining over conflicting uses.
Market : An arrangement through which buyers and sellers exchange goods, services, or assets. Coase contrasted price-mediated exchange with coordination by managerial authority.
Arnold Plant : A British economist whose work on institutions and economic organization influenced students at the London School of Economics. Plant’s teaching helped direct Coase toward studying how businesses are organized.
New institutional economics : An economic approach that studies how institutions shape incentives, exchange, and production. His emphasis on transaction costs helped make institutions central to economic explanation.
Pigouvian tax : A tax intended to make decision-makers account for external costs or benefits of their activities. Coase’s analysis complicates the case for taxes as the default response to external costs.
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