Mr. Coase — whose surname rhymes with “dose” — was widely regarded as one of the most influential economists in generations, the extraordinary length of his career having encompassed several of them.
He said he became a decorated economist through a “series of accidents” and for years seemed destined for a respectable but not terribly remarkable career. Only later in his life did other economists and legal philosophers, as well as judges and government regulators, fully realize the importance of the theories he had begun developing as a young man.
“I was then twenty-one years of age and the sun never ceased to shine,” he said in his Nobel lecture, referring to his age when he delivered a talk that became the basis for his influential essay “The Nature of the Firm.”
“I could never have imagined that these ideas would become some 60 years later a major justification for the award of a Nobel Prize,” he continued. “And it is a strange experience to be praised in my eighties for work I did in my twenties.”
“The Nature of the Firm” was published in 1937 and sought to explain how and why firms exist. “The Problem of Social Cost,” another classic work, followed in 1960 and laid out a theory for managing societal ills caused by industry, such as pollution.
The works wove together economics and the law and summoned academics and policymakers to consider the marketplace in novel ways.
Mr. Coase began his research for “The Nature of the Firm” as a student at the London School of Economics, where he received a scholarship to travel to the United States and study American industries. At a time when the country was mired in the Depression, he met with business leaders at companies such as General Motors, Ford and Union Carbide.
Mr. Coase’s question: Why did certain industries, such as the automotive industry, feature only a few major corporate players while other industries cultivated numerous small-scale firms? His answer lay in “transaction costs,” which he first articulated in 1932 in a lecture in Dundee, Scotland, and later published in the 1937 essay.
Transaction costs include the time and expense of hiring personnel, acquiring raw materials and marketing finished products. In an interview with the Los Angeles Times, Douglas Baird, a University of Chicago colleague of Mr. Coase’s, once summarized the costs as “my time and your time and, God help us, if we have to hire a lawyer, the cost of his time.”
Some companies determine that they will function more efficiently if they control all steps in the production chain. Ford, the New York Times noted, once purchased a rubber plantation rather than retain a contractor to produce tires.
In the Internet era, however, many firms have found contracting to be less onerous and more cost-effective than a soup-to-nuts approach. In making that calculation, they are wittingly or unwittingly relying on Mr. Coase’s insights.
By the late 1950s, he had fully moved his academic career from Britain to the United States. In 1958, he stunned leading economists of the day when he submitted a paper, titled “The Federal Communications Commission,” to the University of Chicago economics department.
He argued that in fields such as broadcasting, the government could create a new marketplace by granting tradable property rights for goods such as radio frequencies.
Aaron Director — the late economist who founded the Journal of Law and Economics, which Mr. Coase would later lead — invited Mr. Coase to the University of Chicago. He was to defend his thesis before a group of 21 thinkers, including Milton Friedman and George Stigler, who held a fundamentally different view of government’s role in society .
According to an account in The Washington Post, Stigler later recalled that the economists initially voted 20 to 1 against Mr. Coase. But in a matter of hours, he managed to persuade all of them to join his camp.
Mr. Coase later elaborated on his ideas in “The Problem of Social Cost” (1960), a seminal work on the relationship between government and the marketplace. He argued, in part, that the market could be trusted to sort out environmental and other disputes without overly heavy government intervention.
For example, initiatives such as cap-and-trade permits might control pollution as efficiently as government regulation and enforcement. Because of the forward-looking nature of such ideas, Mr. Coase’s work remained deeply relevant until the end of his life. He co-authored a book, “How China Became Capitalist,” the year he turned 101.
The Nobel committee honored him for the “discovery and clarification of the significance of transaction costs and property rights for the institutional structure and functioning of the economy.” Mr. Coase summarized his achievement more modestly.
“My contribution to economics,” he said in his Nobel lecture, “has been to urge the inclusion in our analysis of features of the economic system so obvious that, like the postman in G.K. Chesterton’s Father Brown tale, ‘The Invisible Man,’ they have tended to be overlooked.”
Ronald Harry Coase was born Dec. 29, 1910, in Willesden, a suburb of London. Both parents, he wrote in his Nobel biographical sketch, were postal workers who had left school at 12.
As a boy, he was required to wear leg braces and attended what he described as a “school for physical defectives” before moving to a mainstream secondary school. His physical frailty pushed him away from sports and toward academics.
At the London School of Economics, he studied under the noted economist Arnold Plant and received a bachelor’s degree in commerce in 1932. During World War II, he was a statistician in the British war cabinet.
He settled in the United States in 1951, later becoming a U.S. citizen, and taught at institutions including the University of Virginia before joining the University of Chicago in 1964. He led the Journal of Law and Economics for nearly two decades.
His wife, the former Marion Hartung, died in 2012 after 77 years of marriage. He had no immediate survivors.
In his Nobel lecture, Mr. Coase remarked on the tendency of ideas to move in and out of favor.
“I am very much aware that many economists whom I respect and admire will not agree with the opinions I have expressed and some may even be offended by them,” he said. “But a scholar must be content with the knowledge that what is false in what he says will soon be exposed and, as for what is true, he can count on ultimately seeing it accepted, if only he lives long enough.”