Oliver E. Williamson
Encyclopedia
Oliver Eaton Williamson (born September 27, 1932) is an American economist
, professor at the University of California, Berkeley
and recipient of the Nobel Memorial Prize in Economic Sciences
.
A student of Ronald Coase
, Herbert Simon
and Richard Cyert
, he specializes in transaction cost
economics. Williamson received his B.S.
in management from the MIT Sloan School of Management
in 1955, M.B.A.
from Stanford University
in 1960, and his Ph.D.
from Carnegie Mellon University
in 1963. From 1965 to 1983 he was a professor at the University of Pennsylvania
and from 1983 to 1988, Gordon B. Tweedy Professor of Economics of Law and Organization at Yale University
. He has held professorships in business administration, economics, and law at the University of California, Berkeley
since 1988 and is currently the Edgar F. Kaiser Professor Emeritus at the Haas School of Business
. In 2009 he was awarded the Nobel Memorial Prize in Economics for "his analysis of economic governance, especially the boundaries of the firm", sharing it with Elinor Ostrom
.
By drawing attention at high theoretical level to equivalences and differences between market and non-market decision-making, management and service provision, Williamson has been influential in the 1980s and 1990s debates on the boundaries between the public and private sectors.
His focus on the costs of transactions has led Williamson to distinguish between repeated case-by-case bargaining on the one hand and relationship-specific contracts on the other. For example, the repeated purchasing of coal from a spot market
to meet the daily or weekly needs of an electric utility
would represent case by case bargaining. But over time, the utility is likely to form ongoing relationships with a specific supplier, and the economics of the relationship-specific dealings will be importantly different, he has argued.
Other economists have tested Williamson's transaction-cost theories in empirical contexts. One important example is a paper by Paul L. Joskow
, "Contract
Duration and Relationship-Specific Investments: Empirical Evidence from Coal
Markets," in American Economic Review
, March 1987. The incomplete contracts approach to the theory of the firm
and corporate finance
is partly based on the work of Williamson and Coase.
cited Williamson and Elinor Ostrom
to share the 10-million Swedish kronor (£910,000; $1.44m) prize. They were awarded the "prize for their separate work in economic governance." Williamson, in the BBC's paraphrase of the academy's reasoning, "developed a theory where business firms served as structures for conflict resolution."
He has argued that hierarchical organizations, such as companies, represent alternative governance structures, which differ in their approaches to resolving conflicts of interest.
From the Haas School of Business, University of California, Berkeley:
From the University of California, Berkeley:
In The News:
Economist
An economist is a professional in the social science discipline of economics. The individual may also study, develop, and apply theories and concepts from economics and write about economic policy...
, professor at the University of California, Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
and recipient of the Nobel Memorial Prize in Economic Sciences
Nobel Memorial Prize in Economic Sciences
The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics, but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel , is an award for outstanding contributions to the field of economics, generally regarded as one of the...
.
A student of 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...
, Herbert Simon
Herbert Simon
Herbert Alexander Simon was an American political scientist, economist, sociologist, and psychologist, and professor—most notably at Carnegie Mellon University—whose research ranged across the fields of cognitive psychology, cognitive science, computer science, public administration, economics,...
and Richard Cyert
Richard Cyert
Richard Michael Cyert was an American economist and statistician who served as the sixth President of Carnegie Mellon University in Pittsburgh, Pennsylvania, United States.-Early life:...
, he specializes in transaction cost
Transaction cost
In economics and related disciplines, a transaction cost is a cost incurred in making an economic exchange . For example, most people, when buying or selling a stock, must pay a commission to their broker; that commission is a transaction cost of doing the stock deal...
economics. Williamson received his B.S.
Bachelor of Science
A Bachelor of Science is an undergraduate academic degree awarded for completed courses that generally last three to five years .-Australia:In Australia, the BSc is a 3 year degree, offered from 1st year on...
in management from the MIT Sloan School of Management
MIT Sloan School of Management
The MIT Sloan School of Management is the business school of the Massachusetts Institute of Technology, in Cambridge, Massachusetts....
in 1955, M.B.A.
Master of Business Administration
The Master of Business Administration is a :master's degree in business administration, which attracts people from a wide range of academic disciplines. The MBA designation originated in the United States, emerging from the late 19th century as the country industrialized and companies sought out...
from Stanford University
Stanford University
The Leland Stanford Junior University, commonly referred to as Stanford University or Stanford, is a private research university on an campus located near Palo Alto, California. It is situated in the northwestern Santa Clara Valley on the San Francisco Peninsula, approximately northwest of San...
in 1960, and his Ph.D.
Ph.D.
A Ph.D. is a Doctor of Philosophy, an academic degree.Ph.D. may also refer to:* Ph.D. , a 1980s British group*Piled Higher and Deeper, a web comic strip*PhD: Phantasy Degree, a Korean comic series* PhD Docbook renderer, an XML renderer...
from Carnegie Mellon University
Carnegie Mellon University
Carnegie Mellon University is a private research university in Pittsburgh, Pennsylvania, United States....
in 1963. From 1965 to 1983 he was a professor at the University of Pennsylvania
University of Pennsylvania
The University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
and from 1983 to 1988, Gordon B. Tweedy Professor of Economics of Law and Organization at Yale University
Yale University
Yale University is a private, Ivy League university located in New Haven, Connecticut, United States. Founded in 1701 in the Colony of Connecticut, the university is the third-oldest institution of higher education in the United States...
. He has held professorships in business administration, economics, and law at the University of California, Berkeley
University of California, Berkeley
The University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
since 1988 and is currently the Edgar F. Kaiser Professor Emeritus at the Haas School of Business
Haas School of Business
The Walter A. Haas School of Business, also known as the Haas School of Business or simply Haas, is one of 14 schools and colleges at the University of California, Berkeley....
. In 2009 he was awarded the Nobel Memorial Prize in Economics for "his analysis of economic governance, especially the boundaries of the firm", sharing it with Elinor Ostrom
Elinor Ostrom
Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...
.
By drawing attention at high theoretical level to equivalences and differences between market and non-market decision-making, management and service provision, Williamson has been influential in the 1980s and 1990s debates on the boundaries between the public and private sectors.
His focus on the costs of transactions has led Williamson to distinguish between repeated case-by-case bargaining on the one hand and relationship-specific contracts on the other. For example, the repeated purchasing of coal from a spot market
Spot market
The spot market or cash market is a public financial market, in which financial instruments or commodities are traded for immediate delivery. It contrasts with a futures market in which delivery is due at a later date...
to meet the daily or weekly needs of an electric utility
Electric power
Electric power is the rate at which electric energy is transferred by an electric circuit. The SI unit of power is the watt.-Circuits:Electric power, like mechanical power, is represented by the letter P in electrical equations...
would represent case by case bargaining. But over time, the utility is likely to form ongoing relationships with a specific supplier, and the economics of the relationship-specific dealings will be importantly different, he has argued.
Other economists have tested Williamson's transaction-cost theories in empirical contexts. One important example is a paper by Paul L. Joskow
Paul Joskow
Paul Lewis Joskow became President of the Alfred P. Sloan Foundation on January 1, 2008. He is also the Elizabeth and James Killian Professor of Economics, Emeritus at MIT. He has served on the MIT faculty since 1972. From 1994 through 1998 he was Head of the MIT Department of Economics...
, "Contract
Contract
A contract is an agreement entered into by two parties or more with the intention of creating a legal obligation, which may have elements in writing. Contracts can be made orally. The remedy for breach of contract can be "damages" or compensation of money. In equity, the remedy can be specific...
Duration and Relationship-Specific Investments: Empirical Evidence from Coal
Coal
Coal is a combustible black or brownish-black sedimentary rock usually occurring in rock strata in layers or veins called coal beds or coal seams. The harder forms, such as anthracite coal, can be regarded as metamorphic rock because of later exposure to elevated temperature and pressure...
Markets," in American Economic Review
American Economic Review
The American Economic Review is a peer-reviewed academic journal of economics publishing seven issues annually by the American Economic Association. First published in 1911, it is considered one of the most prestigious journals in the field. The current editor-in-chief is Penny Goldberg . The...
, March 1987. The incomplete contracts approach to 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:...
and corporate finance
Corporate finance
Corporate finance is the area of finance dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions. The primary goal of corporate finance is to maximize shareholder value while managing the firm's financial risks...
is partly based on the work of Williamson and Coase.
Theory
Oliver Williamson is credited with the development of the term "Information Impactedness", which applies in situations where it is difficult to ascertain what the costs to information are. This condition existsNobel Memorial Prize in Economic Sciences
In 2009, the Royal Swedish Academy of SciencesRoyal Swedish Academy of Sciences
The Royal Swedish Academy of Sciences or Kungliga Vetenskapsakademien is one of the Royal Academies of Sweden. The Academy is an independent, non-governmental scientific organization which acts to promote the sciences, primarily the natural sciences and mathematics.The Academy was founded on 2...
cited Williamson and Elinor Ostrom
Elinor Ostrom
Elinor Ostrom is an American political economist. She was awarded the 2009 Nobel Memorial Prize in Economic Sciences, which she shared with Oliver E. Williamson, for "her analysis of economic governance, especially the commons." She was the first, and to date, the only woman to win the prize in...
to share the 10-million Swedish kronor (£910,000; $1.44m) prize. They were awarded the "prize for their separate work in economic governance." Williamson, in the BBC's paraphrase of the academy's reasoning, "developed a theory where business firms served as structures for conflict resolution."
He has argued that hierarchical organizations, such as companies, represent alternative governance structures, which differ in their approaches to resolving conflicts of interest.
Awards and fellowships
- The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, 2009
- Distinguished Fellow, American Economic AssociationAmerican Economic AssociationThe American Economic Association, or AEA, is a learned society in the field of economics, headquartered in Nashville, Tennessee. It publishes one of the most prestigious academic journals in economics: the American Economic Review...
, 2007. - Horst Claus Recktenwald Prize in Economics, 2004.
- Fellow, American Academy of Political and Social ScienceAmerican Academy of Political and Social ScienceThe American Academy of Political and Social Science was founded in 1889 to promote progress in the social sciences. Sparked by Professor Edmund J. James and drawing from members of the faculty of the University of Pennsylvania, Swarthmore College, and Bryn Mawr College, the Academy sought to...
, 1997. - Member, National Academy of SciencesUnited States National Academy of SciencesThe National Academy of Sciences is a corporation in the United States whose members serve pro bono as "advisers to the nation on science, engineering, and medicine." As a national academy, new members of the organization are elected annually by current members, based on their distinguished and...
, 1994. - Fellow, American Academy of Arts and SciencesAmerican Academy of Arts and SciencesThe 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...
, 1983. - Fellow, Econometric Society, 1977.
- Alexander Henderson AwardAlexander Henderson AwardThe Alexander Henderson Award is presented to the student at the Tepper School of Business at Carnegie Mellon University who displays the best work in the field of economic theory. A large proportion of the winners of the award has later made contributions to economics that have changed the...
, 1962. - Doctoris Honoris Causa in Economics, Nice University, 2005.
- Doctoris Honoris Causa in Economics, University of Valencia, 2004.
- Doctoris Honoris Causa in Economics, University of Chile, 2000.
- Honorary Doctorate in Economics and Business Administration, Copenhagen Business School, 2000.
- Doctoris Honoris Causa, Groupe HEC (Paris), 1997.
- Doctoris Honoris Causa in Business Administration, St. Petersburg University, 1997.
- Doctoris Honoris Causa in Economics, Turku School of Economics and BusinessAdministration, 1995.
- Doctoris Honoris Causa in Economic Science, Groningen University, 1989.
- Doctoris Honoris Causa in Economic Science, Hochschule St. Gallen, 1987.
- Oeconomiae Doctorem Honoris Causa, Ph.D., Norwegian School of Economics and Business Administration, Jubilee Celebration, 1986.
Books
- Markets and Hierarchies: Analysis and Antitrust Implications, 1975
- The Economic Institutions of Capitalism, 1985
- The Nature of the Firm: Origins, Evolution, and Development (co-edited with Sidney Winter), 1991
- The Mechanisms of Governance, 1996
External links
- Oliver E. Williamson at University of California, BerkeleyUniversity of California, BerkeleyThe University of California, Berkeley , is a teaching and research university established in 1868 and located in Berkeley, California, USA...
- Transaction Cost Economics: The Natural Progression, 2009 lecture at NobelPrize.org
- Profile and Papers at Research Papers in EconomicsResearch Papers in EconomicsResearch Papers in Economics is a collaborative effort of hundreds of volunteers in 57 countries to enhance the dissemination of research in economics. The heart of the project is a decentralized database of working papers, preprints, journal articles and software components. The project started...
/RePEc
From the Haas School of Business, University of California, Berkeley:
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