Oliver E. Williamson

This book brings together in one place the work of one of our most respected economic theorists, on a field in which he has played a large part in originating: the New Institutional Economics. Transaction cost economics, which studies the governance of contractual relations, is the branch of the New Institutional Economics with which Oliver Williamson is especially associated. Transaction cost economics takes issue with one of the fundamental building blocks in microeconomics: the theory of the firm. Whereas orthodox economics describes the firm in technological terms, as a production function, transaction cost economics describes the firm in organizational terms, as a governance structure. Alternative feasible forms of organization - firms, markets, hybrids, bureaus - are examined comparatively. The analytical action resides in the details of transactions and the mechanisms of governance. Transaction cost economics has had a pervasive influence on current economic thought about how and why institutions function as they do, and it has become a practical framework for research in organizations by representatives of a variety of disciplines. Through a transaction cost analysis, The Mechanisms of Governance shows how and why simple contracts give way to complex contracts and internal organization as the hazards of contracting build up. That complicates the study of economic organization, but a richer and more relevant theory of organization is the result. Many testable implications and lessons for public policy accrue to this framework. Applications of both kinds are numerous and growing.

'As recognized by the Economics Sciences Prize Committee in awarding the 2009 Nobel Memorial Prize in Economics, Oliver Williamson altered irreversibly the way we approach and analyze organization. But such is the depth of Williamson insights that often his contributions can only be fully appreciated in the context of real world organizational phenomena. It is thus not uncommon that, after struggling with some particularly thorny problem of economic organization, I will discover on rereading a familiar piece that Williamson had anticipated and already addressed the subject of my efforts. This collection contains the articles and chapters to which I most frequently return and provides the essential readings for anyone seriously interested in the science of organization.' - Scott Masten, University of Michigan, US 'The presence of transaction costs greatly modifies the traditional picture of the allocation of resources through the market.^ It gives rise to many phenomena inexplicable in the simple market view and to problems of government policy. Oliver Williamson has been a leading figure in this analysis. His interpretations of corporate governance and of the complementarity between internal controls and the market have been the most profound in the literature. It is good that his leading essays are now available in collected form.' - Kenneth J. Arrow, Stanford University, US 'Oliver Williamson's contributions to economics are certainly among the most important of past several decades, and their importance will be increasingly recognized as economists come to grips with all that he has accomplished.^ This collection provides an unparalleled view of those contributions, and it belongs on the bookshelf of everyone who wants to understand complex economic transactions.' - David Kreps, Stanford University, US 'This book provides a terrific opportunity to have a collection of Oliver Williamson's best papers on transaction cost economics all in one convenient volume.' - Paul L. Joskow, Alfred P. Sloan Foundation and MIT, US 'Williamson's work on transaction cost economics has shaped the thinking of all social scientists about organizations and institutions. This volume reprints many of his seminal papers on the subject, and is valuable both as commemoration and for reference.' - Avinash Dixit, Princeton University, US --