Full-time MBA Program
It Starts Here: Innovation at Haas
Transaction Cost Economics
What do investment in Eastern Europe, deregulation of the electric utility industry, and human resource management in emerging high-tech firms all have in common? All three are fields of inquiry in which cutting-edge research has been influenced heavily by Haas professor Oliver Williamson’s pioneering work on transaction cost economics.
Transaction cost theory is a multi-disciplinary field that Williamson mapped out to study how varying market and institutional structures affect economic activity. While British economist Ronald Coase proposed the transaction cost approach and won the Nobel Prize for it in 1991, he credited Williamson with turning his ideas into a testable and predictive theory. Williamson has called his own work a blending of the extremes of both soft social science and abstract economic theory.
Williamson's research has applied a microscope to the activity of market contracting and revealed fundamental insights about why markets sometimes work well and sometimes fail. His work led to a new field that provides for understanding the organization of firms and economics, and helps to answer basic questions about why firms merge, why joint ventures fail, and why deregulation may or may not be a good thing.
Williamson's insights have been applied to improve understanding of a broad range of organizational and institutional arrangements, such as the choice and design of contracts, corporate financial structure, antitrust policy, Congressional committee structure, the function and operation of political systems, and the size regular evaluations. For instance, students describe executive associate dean and international finance professor Rich Lyons as “a passionate, high-energy teacher who is open and encouraging.” He has been repeatedly recognized as one of the best instructors at Haas and Berkeley. Responds Lyons: “It's the students who create the energy in the classroom — my job is to harness it.” The MBA program also makes creative use of experienced practitioners from industry in its classes as adjunct professors and lecturers.
