Institutional Economics

Geoffrey M. Hodgson

Institutional economics has important applications to studies of law, business, and economic development. Prominent names in the “new” institutional economics include the Nobel laureates Ronald Coase and Douglass North, as well as Oliver Williamson, the most frequently cited economist of all time. This newer tradition was preceded in the United States in the interwar period by an influential tradition of institutional economics inspired by Thorstein Veblen (1857–1929), Wesley Mitchell (1874–1948), and John Commons (1862–1945). This older tradition dealt extensively with the interface between economic activity, law, customs, and other institutions. An important theme exists in the old institutionalism derived from Veblen's writings in the 1890s to those of John Kenneth Galbraith (1908–2006) after World War II. Old institutionalism differs from much of mainstream economics and new institutional economics because it does not assume a given individual with given purposes or preference functions. Instead of given individuals, old institutionalism considers interactive ...

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