Life and Legacy
Coase lobbed the first ball into the court. The neoclassical model assumes markets work without friction, much as the theory of gases assumes that molecules can move freely within a container. In fact, it was economists bent on creating a social science with the same mathematical foundation as that found in physics which gave rise to the perfect and atomistic neoclassical ideal of the competitive market in the first place. It should come as no surprise that frictionless markets formed the foundation of a market-oriented economics. It might be surprising, though, to imagine it took so long for the economics and finance profession to realize and acknowledge the legacy of such an oversimplification.
KeywordsTransaction Cost Federal Communication Commission Supply Chain System Neoclassical Model Spectrum Auction
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- 5.Ronald Coase, “The Institutional Structure of Production.” American Economic Review 82(4), 1992, pp. 713–19.Google Scholar