The Effects of Coase’s Thought on the Development of the New Institutional Economics

Abstract

Among the current trends of economics, the new institutional economics is gaining more and more importance. The characteristic of the new institutional economics is that it has integrated instutions into the research field of economics. With the new institutional economics, the research field of neoclassical economics has widened, and different disciplines such as law, sociology, organizational theory and political science have started to be analyzed from an economic perspective. Although the new institutional economics started to develop in the 1970s, its origins can be traced back to Coase's paper on "The Nature of the Firm". As stated by Williamson, one of the leading theorists of the new institutional economics, it continues to develop in two aspects. First, it focuses on governance structure and contributes to the development of transaction cost economics. Second, it deals with institutional environment and provides a basis for the economics of property rights. This study will discuss the ideas of Coase, known as the founder of the new instutional economics, and also the contibutions of his studies to the development of the new instutional economics.