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Ronald H. Coase

The 1991 Nobel Prize in Economic Science was awarded to Ronald H. Coase, Professor of Law at the University of Chicago. Coase’s pioneering microeconomic forays into law, sociology, history and other social sciences developed important insights for industrial organization and antitrust, tort law, economic and environmental regulation, property rights, zoning and land use controls and many other issues.

The Independent Institute’s logo was inspired by Ronald Coase’s renowned 1974 essay in the Journal of Law and Economics, “The Lighthouse in Economics,” (reprinted in the book, The Firm, the Market and the Law, by Ronald Coase). Until that time, conventional wisdom from John Stuart Mill to Paul Samuelson had claimed that the lighthouse was the quintessential “public good,” which allegedly had to be provided by government due to the inherent free-riding of those who could not be charged for the services being provided. Coase showed, however, that in Britain, “contrary to the belief of many economists, a lighthouse service can be provided by private enterprise... The lighthouses were built, operated, financed and owned by private individuals, who could sell a lighthouse or dispose of it by bequest. The role of the government was limited to the establishment and enforcement of property rights in the lighthouse.” Only later did the British government consolidate all lighthouse services under its own monopoly in order to eliminate competition and directly reap the financial benefits developed by private entrepreneurs.

In addition to exposing the fallacies of a favorite public-goods rationalization, Coase’s essay rescued the lighthouse as a symbol of courage, enlightenment and independence.

Also, see the Independent Institute Working Paper, “The Lighthouse as a Private-Sector Collective Good,” by Fred E. Foldvary.



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