Elinor Ostrom and Oliver Williamson win Nobel for the economics of governance

Elinor Ostrom of Indiana University and Oliver E. Williamson of the University of California, both US citizens, will share the 2009 Nobel Prize for Economics.

The Royal Swedish Academy of Sciences has decided to award the `Sveriges Riksbank Prize in Economic Sciences' in memory of Alfred Nobel for 2009 to Elinor Ostrom of Indiana University, Bloomington, In, USA, "for her analysis of economic governance, especially the commons" and Oliver E Williamson of the University of California, Berkeley, Ca, USA, "for his analysis of economic governance, especially the boundaries of the firm," the Nobel Prize Committee said in a release.

"Elinor Ostrom has demonstrated how common property can be successfully managed by user associations," the Nobel committee said, adding, "Oliver Williamson has developed a theory where business firms serve as structures for conflict resolution."

These seminal studies have helped advance economic governance research from the fringe to the forefront of scientific attention, the release noted.

"Economic transactions take place not only in markets, but also within firms, associations, households, and agencies. Whereas economic theory has comprehensively illuminated the virtues and limitations of markets, it has traditionally paid less attention to other institutional arrangements. The research of Elinor Ostrom and Oliver Williamson demonstrates that economic analysis can shed light on most forms of social organisation," the releases said.

Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatised. Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories. She observes that resource users frequently develop sophisticated mechanisms for decision-making and rule enforcement to handle conflicts of interest, and she characterises the rules that promote successful outcomes.