Evolutionary Aspects of Coasean Economics

Abstract

Ronald Coase, who formally introduced the concepts of transaction costs and property rights into economic analysis, is regarded as one of the founders of new institutional economics. New institutional economics has extended neoclassical economics to the realm of social institutions and has established itself as the foundation of mainstream institutional analysis. However, although Coase considered his theory as an extension of mainstream economic theory, it has noteworthy evolutionary aspects, notwithstanding Coase’ s rejection of biological analogies. This article reexamines Coase’ s views on economic agents and institutional structures and identifies two aspects of his evolutionary perspective: his strong interests in human nature as the product of long-term evolution and in the dynamics of interrelated changes in institutional structures through institutional costs. We suggest that Coasean economics could and should be developed as evolutionary economics. In this respect, forming an economic policy of institutions must not be a one-time, readymade design, but a trial-and-error process.