American Ostrom and Williamson share Nobel Prize for economics

20:37, October 12, 2009      

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Elinor Ostrom and Oliver E. Williamson, both from the United States, have won the 2009 Nobel Prize for economics for their analysis of economic governance, the Royal Swedish Academy of Sciences announced Monday.

Ostrom was awarded "for her analysis of economic governance, especially the commons," and Williamson won the prize "for his analysis of economic governance, especially the boundaries of the firm," said Professor Gunnar Oquist, Permanent Secretary of the academy at the Press Conference in Stockholm which was live broadcast through webcam.

Ostrom has demonstrated how common property can be successfully managed by user associations while Williamson has developed a theory where business firms serve as structures for conflict resolution, according to a statement issued by the academy.

Their achievements are about non market institutions, explained the Nobel Committee.

Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized.

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 and promote successful outcomes, said the Nobel committee.

Williamson has argued that the drawback of markets is that they often entail haggling and disagreement. The drawback of firms is that authority can be abused. But when market competition is limited, firms are better suited for conflict resolution than markets.

The two contributions are complementary. Williamson focuses on the problem of regulating transactions that are not covered by detailed contracts or legal rules; Ostrom focuses on the separate problem of rule enforcement.

Ostrom, born in 1933 in Los Angeles, got her Ph.D in Political Science in 1965 from the University of California, Los Angeles. She was Professor at the School of Public and Environmental Affairs, both at Indiana University, Bloomington and founding Director of the Center for the Study of Institutional Diversity, Arizona State University.

Williamson, born in 1932 got his Ph.D. in Economics in 1963 from Carnegie Mellon University in Pittsburgh. He is Professor Emeritus of Business, Economics and Law and Professor of the Graduate School, both at the University of California, Berkeley, USA.

As the first woman who won the Nobel Prize in Economics, Ostrom told the press conference in Stockholm over the telephone that she will not use the prize money for herself.

“It was a great surprise and appreciation, it is a great honor,” answered Ostrom about her first reaction at the news that she won the prize.

“If possible I will use it to support workshops for scholars from the US, China and many other countries, there are wonderful scholars and researchers in the field,” said Ostrom over the phone.

The two laureates were to equally share the prize worth 10 million kronor (1.4 million U.S. dollars).

The Nobel Memorial Prize in Economic Sciences, officially called The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, is an award for outstanding contributions in the field of economics.

Instituted by Sweden's central bank in 1968 and first awarded in 1969, the prize is not part of the original crop of Nobel Prizes set out in Alfred Nobel's 1895 will.

The economics prize is awarded by the Royal Swedish Academy of Sciences in accordance with rules governing the award of the Nobel Prizes.

No more than three people can share the award for a given year and the academy announces laureate or laureates of the prize every October.

Together with the Nobel Prizes in medicine, chemistry, physics and literature, the economics prize is handed out in Stockholm on Dec. 10, the anniversary of prize founder Alfred Nobel's death in 1896.

Laureate of the award gets a medal, a diploma and 10 million Swedish kronor (1.4 million U.S. dollars).

By Xuefei Chen, People's Daily Online, Stockholm.
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