Harold Demsetz
Encyclopedia
Harold Demsetz is a professor emeritus
of economics
at the University of California at Los Angeles (UCLA).
Demsetz grew up on the west side of Chicago, the grandchild of immigrants from central and eastern Europe. He studied engineering, forestry, and philosophy at four universities before being awarded a B.A. (1953) in economics from the University of Illinois
, and an MBA (1954) and a Ph.D. (1959) from Northwestern University
. While a graduate student, he published an article each in Econometrica
and the Journal of Political Economy
.
He taught at the University of Michigan
(1958–60), UCLA, 1960–63, and the Graduate School of Business at the University of Chicago
, 1963-71. In 1971, he returned permanently to UCLA's Economics Department, which he chaired 1978-80. He held the Arthur Andersen UCLA Alumni Chair in Business Economics, 1986-95. He has been affiliated with the Center for Naval Analyses
and the Hoover Institution
.
Demsetz is a Fellow of the American Academy of Arts and Sciences
, a Director of the Mont Pelerin Society
, and a past (1996) President of the Western Economics Association.
of economic theory, and is a pioneer of managerial economics
. He has expanded the theory of property rights now prevalent in law and economics
. Even though Demsetz never employed game theory
, he is a major figure in industrial organization
through his writings on the theory of the firm
, antitrust policy, and business regulation
. His expository style is devoid of mathematical formalism to an extent unusual for someone who began his career after 1950. His principal influences include Frank Knight
and a number of colleagues: Armen Alchian
, Ronald Coase
, Aaron Director
, and George Stigler
.
Demsetz was the first to propose emissions trading
as a way of giving polluters an economic incentive to reduce their emission
s of pollutant
s. He coined the term "nirvana fallacy
" in 1969.
Emeritus
Emeritus is a post-positive adjective that is used to designate a retired professor, bishop, or other professional or as a title. The female equivalent emerita is also sometimes used.-History:...
of economics
Economics
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The term economics comes from the Ancient Greek from + , hence "rules of the house"...
at the University of California at Los Angeles (UCLA).
Career
Demsetz (1988) includes a short intellectual autobiography.Demsetz grew up on the west side of Chicago, the grandchild of immigrants from central and eastern Europe. He studied engineering, forestry, and philosophy at four universities before being awarded a B.A. (1953) in economics from the University of Illinois
University of Illinois at Urbana-Champaign
The University of Illinois at Urbana–Champaign is a large public research-intensive university in the state of Illinois, United States. It is the flagship campus of the University of Illinois system...
, and an MBA (1954) and a Ph.D. (1959) from Northwestern University
Northwestern University
Northwestern University is a private research university in Evanston and Chicago, Illinois, USA. Northwestern has eleven undergraduate, graduate, and professional schools offering 124 undergraduate degrees and 145 graduate and professional degrees....
. While a graduate student, he published an article each in Econometrica
Econometrica
Econometrica is a peer-reviewed academic journal of economics, publishing articles not only in econometrics but in many areas of economics. It is published by the Econometric Society and distributed by Wiley-Blackwell. Econometrica is one of the most highly ranked economics journals in the world...
and the Journal of Political Economy
Journal of Political Economy
The Journal of Political Economy is an academic journal run by economists at the University of Chicago and published every two months by the University of Chicago Press. The journal publishes articles in both theoretical economics and empirical economics...
.
He taught at the University of Michigan
University of Michigan
The University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
(1958–60), UCLA, 1960–63, and the Graduate School of Business at the University of Chicago
University of Chicago
The University of Chicago is a private research university in Chicago, Illinois, USA. It was founded by the American Baptist Education Society with a donation from oil magnate and philanthropist John D. Rockefeller and incorporated in 1890...
, 1963-71. In 1971, he returned permanently to UCLA's Economics Department, which he chaired 1978-80. He held the Arthur Andersen UCLA Alumni Chair in Business Economics, 1986-95. He has been affiliated with the Center for Naval Analyses
Center for Naval Analyses
CNA's Center for Naval Analyses is a federally funded research and development center for the Navy and the Marine Corps. It also provides research and analysis services to other military and government agencies to help improve the efficiency and effectiveness of U.S...
and the Hoover Institution
Hoover Institution
The Hoover Institution on War, Revolution and Peace is a public policy think tank and library founded in 1919 by then future U.S. president, Herbert Hoover, an early alumnus of Stanford....
.
Demsetz is a Fellow of the American Academy of Arts and Sciences
American Academy of Arts and Sciences
The American Academy of Arts and Sciences is an independent policy research center that conducts multidisciplinary studies of complex and emerging problems. The Academy’s elected members are leaders in the academic disciplines, the arts, business, and public affairs.James Bowdoin, John Adams, and...
, a Director of the Mont Pelerin Society
Mont Pelerin Society
The Mont Pelerin Society is an international organization composed of economists , philosophers, historians, intellectuals, business leaders, and others who favour classical liberalism...
, and a past (1996) President of the Western Economics Association.
Ideas
Demsetz belongs to the Chicago schoolChicago school (economics)
The Chicago school of economics describes a neoclassical school of thought within the academic community of economists, with a strong focus around the faculty of The University of Chicago, some of whom have constructed and popularized its principles...
of economic theory, and is a pioneer of managerial economics
Managerial economics
Managerial economics as defined by Edwin Mansfield is "concerned with application of economic concepts and economic analysis to the problems of formulating rational managerial decision." It is sometimes referred to as business economics and is a branch of economics that applies microeconomic...
. He has expanded the theory of property rights now prevalent in law and economics
Law and economics
The economic analysis of law is an analysis of law applying methods of economics. Economic concepts are used to explain the effects of laws, to assess which legal rules are economically efficient, and to predict which legal rules will be promulgated.-Relationship to other disciplines and...
. Even though Demsetz never employed game theory
Game theory
Game theory is a mathematical method for analyzing calculated circumstances, such as in games, where a person’s success is based upon the choices of others...
, he is a major figure in industrial organization
Industrial organization
Industrial organization is the field of economics that builds on the theory of the firm in examining the structure of, and boundaries between, firms and markets....
through his writings on the theory of the firm
Theory of the firm
The theory of the firm consists of a number of economic theories that describe the nature of the firm, company, or corporation, including its existence, behavior, structure, and relationship to the market.-Overview:...
, antitrust policy, and business regulation
Regulation
Regulation is administrative legislation that constitutes or constrains rights and allocates responsibilities. It can be distinguished from primary legislation on the one hand and judge-made law on the other...
. His expository style is devoid of mathematical formalism to an extent unusual for someone who began his career after 1950. His principal influences include Frank Knight
Frank Knight
Frank Hyneman Knight was an American economist who spent most of his career at the University of Chicago, where he became one of the founders of the Chicago school. Nobel laureates James M. Buchanan, Milton Friedman and George Stigler were all students of Knight at Chicago. Knight supervised...
and a number of colleagues: Armen Alchian
Armen Alchian
Armen Albert Alchian is an American economist and an emeritus professor of economics at the University of California, Los Angeles....
, Ronald Coase
Ronald Coase
Ronald Harry Coase is a British-born, American-based economist and the Clifton R. Musser Professor Emeritus of Economics at the University of Chicago Law School. After studying with the University of London External Programme in 1927–29, Coase entered the London School of Economics, where he took...
, Aaron Director
Aaron Director
Aaron Director , a celebrated professor at the University of Chicago Law School, played a central role in the development of the Chicago school of economics...
, and George Stigler
George Stigler
George Joseph Stigler was a U.S. economist. He won the Nobel Memorial Prize in Economic Sciences in 1982, and was a key leader of the Chicago School of Economics, along with his close friend Milton Friedman....
.
Demsetz was the first to propose emissions trading
Emissions trading
Emissions trading is a market-based approach used to control pollution by providing economic incentives for achieving reductions in the emissions of pollutants....
as a way of giving polluters an economic incentive to reduce their emission
Exhaust gas
Exhaust gas or flue gas is emitted as a result of the combustion of fuels such as natural gas, gasoline/petrol, diesel fuel, fuel oil or coal. According to the type of engine, it is discharged into the atmosphere through an exhaust pipe, flue gas stack or propelling nozzle.It often disperses...
s of pollutant
Pollutant
A pollutant is a waste material that pollutes air, water or soil, and is the cause of pollution.Three factors determine the severity of a pollutant: its chemical nature, its concentration and its persistence. Some pollutants are biodegradable and therefore will not persist in the environment in the...
s. He coined the term "nirvana fallacy
Nirvana fallacy
The nirvana fallacy is the logical error of comparing actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume that there is a perfect solution to a particular problem...
" in 1969.
Major publications
- 1967, "Toward a Theory of Property Rights," American Economic Review.
- 1968, "Why Regulate Utilities?" Journal of Law and Economics.
- 1969, "Information and Efficiency: Another Viewpoint," Journal of Law and Economics.
- 1972 (with Armen AlchianArmen AlchianArmen Albert Alchian is an American economist and an emeritus professor of economics at the University of California, Los Angeles....
, "Production, Information Costs and Economic Organization," American Economic Review. - 1973, "Industry Structure, Market Rivalry and Public Policy," Journal of Law and Economics.
- 1974 "Two systems of belief about monopoly," in H. Goldschmid, et al., eds., Industrial Concentration: The New Learning, Boston: Little Brown, also chapter 7 in, Demsetz, Harold. Efficiency, Competition, and Policy. Cambridge MA: Basil Blackwell, 1989.)
- 1979, "Accounting for Advertising as a Barrier to Entry," Journal of Business.
- 1982. Economic, Legal, and Political Dimensions of Competition.
- 1988. The Organization of Economic Activity, 2 vols. Blackwell. Reprints most of Demsetz's better known journal articles published as of date.
- 1994 (with Alexis JacqueminAlexis JacqueminAlexis Jacquemin was a Belgian economist. He received his PhD at the Université de Liège, and became a professor at the Universite Catholique de Louvain in 1974. In 1983, he was awarded the Francqui Prize on Human Sciences.-Major publications:...
). Anti-trust Economics: New Challenges for Competition Policy. - 1995. The Economics of the Business Firm: Seven Critical Commentaries.
- 1997, "The Primacy of Economics: An Explanation of the Comparative Success of Economics in the Social Sciences" (Presidential Address to the Western Economics Association), Economic Inquiry.
External links
- Brief biography of Demsetz on the web site of UCLA's Economics Department.
- New School for Social Research web page on Demsetz.