Oliver E. Williamson: From organizations to institutions

Abstract

Williamson has been awarded the Nobel Prize in Economics for his analysis of issues of governance, particularly the trade-off between markets (buy) and hierarchies (make). However, his contributions go deeper, digging into the nature and properties of alternative modes organizing economic activities: markets, hybrids, integrated organizations, public bureaus. This exploration calls for a set of concepts that developed as analytical tools of their own, primarily transaction costs and contracts. Although we could hardly overrate this breakthrough, we submit that Williamson's contribution goes further and should change our representation of how a market economy works and how it is regulated, with a substantially revised conception of competition policies. As such it ends up quite naturally with the embeddedness of transactions into their institutional environment.