Examines the implication of high price and production of medical services in the United States. Rate of medical service productivity increase in overall economic productivity; provision of income compensation required to maintain consumer utility function; importance of population health level...

In this paper I suggest that besides Knight's well recognized "uncertainty" explanation of the firm, he had another one. "Moral hazard" is the central feature in the second, largely overlooked theory. I argue, and attempt to document, that this theory is not a chance excursion but is rather...

The collaboration among people is often subject to shirking; the net gain from the collaboration depends on the contract governing it. I argue that the entrepreneur assumes the role of the residual claimant because his actions are more costly to monitor than those of the factors with which he...

Thirty years ago "The Problem of Social Cost" [1960] was published. It transformed the field of Industrial Organization and greatly expanded its scope. We briefly survey the state of the field before 1960, and then show some of the ways by which Coase's paper changed economic thinking

Using property-rights tools, this paper develops a theory of the transition from despotic to rule-of-law regimes, relying on the notion that rulers and subjects are interested in maximizing wealth. Keeping subjects in check enhances despots' internal security, but at the cost of lower output,...

Under caveat emptor, buyers effect their measurements prior to exchange. Long-term relations and contracts allow buyers to measure commodities at consumption. Buyers use subjective measurements in long-term relations. Contractual guarantees shift enforcement to the state, but require objective,...