THE NOBEL prize for economics has been awarded to two American academics who pioneered research into how individuals co- operate and share common resources and work together within companies.
Elinor Ostrom, professor of political science at Indiana University, and Oliver Williamson, professor emeritus at the Haas School of Business, will share the 2009 prize, the Royal Swedish Academy of Sciences announced yesterday in Stockholm.
It said their various work into economic governance beyond the financial markets had played a major role in challenging established thinking.
Prof Ostrom, the first woman winner of the economics prize, was recognised for her work on how “common property can be successfully managed by user associations”.
Her research examined how politics, economics and the legal system affect the way natural resources are used and has shown that community-driven projects can be more efficient than privatisation or state ownership.
Prof Ostrom said her research into the way in which citizens would organise themselves to protect an important asset was particularly relevant to climate change.
“It is important that there is international agreement, but we can be taking steps at family level, community level, civic and national level . . . There are many steps that can be taken that will not solve it on their own but cumulatively will make a big difference.”
Prof Williamson’s work has looked at how conflicts of interest are handled by hierarchical organisations, such as firms, compared with stock markets. It explains why it is sometimes better for a company to develop a product or service in-house rather than buying it from outside.
“Competitive markets work relatively well because buyers and sellers can turn to other trading partners in case of dissent,” the academy said, “but when competition is limited, firms are better suited for conflict resolution than markets.”
An academy spokesman said Prof Williamson was “woken at 3am to tell him the news and he is a happy laureate”. Prof Ostrom and Prof Williamson will each receive 5 million Swedish crowns (€484,000).
The bookies’ favourite was Eugene Fama, the University of Chicago professor known as the father of the “efficient market hypothesis”.
This theory, which states that the price of a traded asset, such as a share, fully reflects its true value, has been discredited by the market turmoil of the last two years. – (Guardian service)