American Awarded Nobel Prize in Economic Sciences
AMERICAN economist Ronald Coase, a professor at the University of Chicago, has won the Nobel Memorial Prize in Economic Sciences for breakthrough contributions to "our understanding of the way the economy functions."The Swedish National Bank, which awarded the prize Tuesday, said Mr. Coase showed that traditional basic microeconomic theory was incomplete because it only included production and transport costs, neglecting the costs of entering into and executing contracts and of managing organizations. "Such costs are commonly known as transaction costs, and they account for a considerable share of the total use of resources in the economy," the bank said, adding that when these costs are taken into account, "it turns out that the existence of firms, different corporate forms, variations in contract arrangements, the structure of the financial system and even fundamental features of the legal system can be given relatively simple explanations." In its citation the bank said, "Until recently, basic economic analysis concentrated on studying the functioning of the economy in the framework of an institutional structure which was taken as given." But the bank said that by means of a radical extension of microeconomic theory, Coase "succeeded in specifying principles for explaining the institutional structure of the economy, thereby also making new contributions to our understanding of the way the economy functions." "When [Coase's] breakthrough finally occurred during the 1970s and 1980s, it was all the more emphatic," the citation said. "Today Coase's theories are among the most dynamic forces behind research in economic science and jurisprudence." "In perhaps somewhat pretentious terminology, Coase may be said to have identified a new set of elementary particles in the economic system," the bank said. Coase, born in Willesden, Britain, in 1910, conducts research as an economics professor at the University of Chicago Law School. A spokesman for the university said Coase was at an unspecified location in France and could not immediately be reached for comment. The economics prize carries with it $900,000, a gold medal and a diploma to be presented to Coase at a ceremony in Stockholm on Dec. 10, the anniversary of Alfred Nobel's death. It is the only one of the six Nobel prizes not to have been instituted by Nobel, the Swedish inventor of dynamite who instigated the prize series in his 1895 will. It was set up by the Swedish National Bank in 1968 as the Nobel Memorial Prize in Economic Science. The economic award was the fourth in the 1991 series, following the award Monday of the peace prize to Burmese dissident Aung San Suu Kyi. The literature prize went to South African author Nadine Gordimer and the medicine prize to German physiologists Erwin Neher and Bert Sakmann. Yesterday, French professor Pierre-Gilles de Gennes was awarded in the Nobel Prize in physics and Richard R. Ernst of Switzerland won the chemistry prize.