Oliver Williamson shared the 2009 Nobel Memorial Prize in Economic Sciences for analyzing economic governance, especially the boundaries of firms.
Williamson shared the prize with Elinor Ostrom, whose research examined how communities manage common resources. Williamson focused on transactions: the exchanges involved in markets, contracts, and organizations.
His transaction-cost economics asks why some activities are conducted inside firms while others are handled through markets. Factors such as uncertainty, repeated dealings, and the risk of opportunistic behavior can make one form of governance more efficient than another.
A common mix-up is to attribute the entire 2009 prize to Ostrom because she made history as the first woman to win the economics award. The prize was shared equally, and Williamson’s recognized contribution concerned the governance of firms and contractual relationships.