The Economic Institutions of Capitalism

Williamson takes Coase's intuition and turns it into a complete theory. Contracts are incomplete, people act with opportunism, and some assets are specific enough that you cannot acquire them on the open market without risk. That is why firms tend to vertically integrate — not just for efficiency, but for protection. Williamson explains why organisations end up looking the way they do: heavy, hierarchical, full of internal controls. All of that is a rational response to an environment where coordinating outside is dangerous. Awarded the Nobel Prize in Economics in 2009.