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No institution is a free lunch: a reconstruction of Ronald Coase

  • Ugo Pagano


The two major contributions of Ronald Coase, written at distant points of his long life, have been often interpreted as different and, somehow, contradicting views of the merits of the market mechanism. We argue that the underlying point of the two articles is the same and it can be summarized by the statement that no institution is a free lunch. When the unity of the Coasian theory is properly understood, it offers a powerful challenge to standard neo-classical production theory and opens new analytical tools to understand and to compare the institutions of production.

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Article provided by Springer in its journal International Review of Economics.

Volume (Year): 59 (2012)
Issue (Month): 2 (July)
Pages: 189-200

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Handle: RePEc:spr:inrvec:v:59:y:2012:i:2:p:189-200
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  1. Ugo Pagano, 2009. "Marrying in the Cathedral: a Framework for the Analysis of Corporate Governance," Department of Economics University of Siena 571, Department of Economics, University of Siena.
  2. Pagano, Ugo, 2011. "Interlocking complementarities and institutional change," Journal of Institutional Economics, Cambridge University Press, vol. 7(03), pages 373-392, September.
  3. Coase, R H, 2000. "The Acquisition of Fisher Body by General Motors," Journal of Law and Economics, University of Chicago Press, vol. 43(1), pages 15-31, April.
  4. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
  5. Pagano, Ugo, 2000. "Public markets, private orderings and corporate governance," International Review of Law and Economics, Elsevier, vol. 20(4), pages 453-477, December.
  6. Usher, Dan, 1998. "The Coase theorem is tautological, incoherent or wrong," Economics Letters, Elsevier, vol. 61(1), pages 3-11, October.
  7. repec:cup:cbooks:9780521781640 is not listed on IDEAS
  8. Chichilnisky, G. & Heal, G. & Pagano, U., 1994. "Property Rights and Returns to Scale: Patents, Firms and Market Failure," Papers 94-08, Columbia - Graduate School of Business.
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