Economist and Nobel laureate Ronald Coase, known for his theories on business
and regulation, died Monday, the University of Chicago said.
He was 102.
Coase is best remembered for two economic papers, the first of which was largely conceived while he was an undergraduate student and published in 1937, "The Nature of the Firm." It dealt with the fundamental questions of why people start companies and how they grow, The New York Times said. In it, he argued that the basic costs of a transaction for both sides is what defines how businesses make decisions. Lessening those costs in both real dollars and other less tangible things like labor intensity were drivers in the vertical integration seen in the 1960s.
For example, large manufacturers such as Ford began opening their own steel mills and rubber factories rather than acquire those elements from suppliers.
Coase's theory would prove just as useful in the later 20th century when companies that needed to be leaner to compete with corporate giants began outsourcing even the most basic functions like cutting paychecks.
Coase's second famous economic research came as he studied the Federal Communications Commission's practice of issuing radio and television broadcast licenses. In the early onset of mass media, Coase noted the FCC would sell off a broadcast permit on a first-come, first-serve basis to anyone who could afford to buy it and met the basic requirements.
Coase argued against the approach, saying the FCC should treat the licenses as commodities and auction them off, then allow the holders to use them or sell them at market price.
The practice would later become the bedrock of the FCC's policy on cellular telephone transmissions and would raise billions for the federal treasury.
In 1991, Coase was awarded the Nobel Memorial Prize in Economic Science.
Coase, born in Willesden, England, taught at the University of Chicago where he studied both economics and law -- saying he was an "accidental economist" because he spent most of his time on the legal side of things.
He is predeceased by a wife, Marion, who died last year. He has no immediate descendants.
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