Elinor Ostrom and Oliver E. Williamson, both from the United States of America, have won the Noble Prize for Economics 2009 for their analysis of economic governance.

Osrtom is the first female to be awarded with the Nobel Prize in Economic Sciences. She was honoured with half the 10-million-kronor (1.42-million-dollar) prize “for her analysis of economic governance, especially the commons” demonstrating “how common property can be successfully managed by user associations”, the Royal Swedish Academy of Sciences announced.

Oliver E. Williamson received the other half of the prize “for his analysis of economic governance, especially the boundaries of the firm” developing “a theory where business firms serve as structures for conflict resolution”, according to the statement issued by the Nobel Committee.

Elinor Ostrom is the Arthur F. Bentley Professor of Political Science and Co-Director of the Workshop in Political Theory and Policy Analysis at the at Indiana University Bloomington, IN, USA. Also, she is the Co-Director of the Center for the Study of Institutions, Population, and Environmental Change at the Arizona State University

Williamson is the Professor Emeritus of Business, Economics, and Law at the Haas Business and Public Policy Group, University of California, Berkeley, CA, USA.

The research conducted by the two laureates demonstrates that economic analysis is applicable to most forms of social organization including firms, associations, households, agencies, etc. and not only to the markets.

Elinor Ostrom carried out studies on user-managed fish stocks, pastures, woods, lakes, and groundwater basins concluding that in contrast to the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized the results were better than predicted by standard theories.

Williamson has put forward the argument that markets and hierarchical organizations represent alternative governance structures which differ in their approaches to resolving conflicts of interest and the propensity of economic agents to conduct their transactions inside the boundaries of a firm increases along with the relationship-specific features of their assets, the statement added.

Author: Meenal Johari (Pune)

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