Interesting Economic Articles by Economists
If you’re into economics and want to learn more, read these interesting economic articles by economists. Coase’s 1937 article has many subfields within economics, and his ideas have shaped the field in numerous ways. Alchian’s profit-seeking firm model and the information technology revolution are a few examples. This article has influenced just about everything in industrial organization since. But why is Coase’s 1937 article so interesting?
Coase’s 1937 article
The premise of Coase’s 1937 article on economics is that we should try to settle disputes between parties on a voluntary basis and should intervene only when property rights are too weak or transaction costs are too high. It may sound like laissez-faire thinking, but this economist was a pragmatic thinker. He spent most of his career teaching at Chicago University and he firmly believed that economics is a science, and that government interventions should be kept to a minimum.
Ronald Coase’s first essay on economics appeared in Dundee, Scotland, in 1932. He had previously spent a year in America. It took another five years for the “nature of the firm” to appear in print. Another of Coase’s famous articles, “The Problem of Social Cost,” was published five years later, in 1960. Coase argued that private bargaining can solve social problems like pollution as long as property rights are clearly defined. In other words, if property rights are clearly defined, transaction costs are relatively low.
Alchian’s model of profit-seeking firms
Alchian’s contribution to the economics literature was an evolutionary perspective on firm behavior that included the idea of the motivation to maximize profits. The assumption that firms always seek to maximize profits has been a controversial topic since it contradicts the belief that all firms can maximize their profit. This article argues that inefficient firms tend to survive and remain profitable. …
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