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The New Institutional Economics: Its Start, its Meaning, its Prospects

Published online by Cambridge University Press:  01 July 2005

Rudolf Richter
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Abstract

This article first describes the history of the use of the term ‘new institutional economics’ (NIE) since its introduction by Oliver Williamson. It shows how the term has evolved from a generic term to a standard term on the basis of NIE conference publications and collective volumes that appeared between 1984 and 1997. In 1997, the International Society for New Institutional Economics was founded. Ronald Coase, Douglass North and Oliver Williamson were the driving force behind this development. In the second part of this article, the meaning of the NIE is outlined according to the basic concepts of Williamson and North. The ideas of these two protagonists are compared with each other and their better-known criticisms are described and assessed. The final part of the article deals with possibilities for broadening and deepening the objectives and analytical style of the NIE. It concludes with the observation that the potentialities of the NIE are far from being exhausted.

Keywords

transaction cost economicsnew institutional economics of historycriticism of the new institutional economics‘equilibrium of game’ view of institutionsnew institutionalism of sociologynew institutionalism of political science
Type
Articles
Information
European Business Organization Law Review (EBOR) , Volume 6 , Issue 2 , June 2005 , pp. 161 - 200
Copyright
© 2005 T.M.C. Asser Press

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Footnotes

Revised version of a paper written at the Hoover Institution, Stanford University, in Fall 2003 and first presented at the Center of New Institutional Social Science, Washington University, St. Louis, Missouri, on 4 December 2003. The financial support of the Fritz Thyssen Foundation is gratefully acknowledged. I thank Jan Kmenta (University of Michigan) and Eirik G. Furubotn (Texas A&M) for valuable comments. I also thank Rainer Kulms (editor-in-chief of EBOR) for his thoughtful suggestions. Any remaining mistakes are the sole responsibility of the author.