transaction cost economics

Adam Smith and the Digital Economy: Connectedness and Gains From Trade

Economics, Uncategorized / By

How can an 18th-century Scottish philosopher and economist help us understand the digital economy and our modern, hyper-connected world? That’s a question I’m tackling in a series of three essays at libertarianism.org. Digital technologies have increased our connectedness in profound ways. In the first essay I examine how Smith’s ideas about specialization and exchange combine …

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Coase’s Influence on Economics, and Adam Smith’s Influence on Coase

Economics, Uncategorized / By

https://www.facebook.com/CPCMP/videos/vb.181913810273/10160362413965274/?type=3&theater Understanding the economy as a dynamic, complex system relies on the foundational work of several economists, including Adam Smith (of course) and Ronald Coase. As Coase observed in his 1991 Nobel Prize address, What I have done is to show the importance for the working of the economic system of what may be termed …

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Illinois Nextgrid, Platform Economics, and a New Working Paper

Economics, Electricity, Technology / By

Recently the Illinois Commerce Commission kicked off its “utility of the future” initiative, called NextGrid. This 18-month stakeholder study will gather ideas to map out a strategic direction for electricity in Illinois. I spoke on a panel at the kickoff event that focused on platforms and transactive energy; here’s a summary of the panel from …

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Forthcoming Paper: Implications of Smart Grid Innovation for Organizational Models in Electricity Distribution

2 Comments / Economics, Electricity, Regulation, Technology / By

Back in 2001 I participated in a year-long forum on the future of the electricity distribution model. Convened by the Center for the Advancement of Energy Markets, the DISCO of the Future Forum brought together many stakeholders to develop several scenarios and analyze their implications (and several of those folks remain friends, playmates in the …

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Continuing Debate over the Economic Origins of Electric Utility Regulation

Economic history, Economics, Electricity, Regulation / By

State regulation of electric utilities began in earnest about 1907 and by around 1920 almost all states had begun state regulation. Prior to state regulation, most electric utilities were regulated through city-issued franchise agreements. Was state regulation of privately-owned electric utilities efficiency enhancing relative to the municipal franchise regulation of electric utilities that preceded it? …

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Aig-Ency Problems

1 Comment / Economics / By

Michael Giberson At the Streetwise Professor, Craig Pirrong finds that the current political flap over AIG bonuses well illustrates the value of rules over discretion. His conclusion matches my view: “Several hundred million dollars is a lot of money.  But it pales in comparison to the amount that would be lost by undermining contracts and …

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