Harold Demsetz (; May 31, 1930 – January 4, 2019) was an American professor of
economics at the
University of California at Los Angeles
The University of California, Los Angeles (UCLA) is a public university, public Land-grant university, land-grant research university in Los Angeles, California. UCLA's academic roots were established in 1881 as a Normal school, teachers colle ...
(UCLA).
Career
Demsetz grew up on the
West Side of Chicago, the grandchild of
Jewish
Jews ( he, יְהוּדִים, , ) or Jewish people are an ethnoreligious group and nation originating from the Israelites Israelite origins and kingdom: "The first act in the long drama of Jewish history is the age of the Israelites""T ...
immigrants from central and eastern Europe. He studied engineering, forestry, and philosophy at four universities before being awarded a B.A. (1953) in economics from the
University of Illinois
The University of Illinois Urbana-Champaign (U of I, Illinois, University of Illinois, or UIUC) is a public land-grant research university in Illinois in the twin cities of Champaign and Urbana. It is the flagship institution of the Universi ...
, and an MBA (1954) and a Ph.D. (1959) from
Northwestern University
Northwestern University is a private research university in Evanston, Illinois. Founded in 1851, Northwestern is the oldest chartered university in Illinois and is ranked among the most prestigious academic institutions in the world.
Chart ...
. While a graduate student, he published an article each in ''
Econometrica
''Econometrica'' is a peer-reviewed academic journal of economics, publishing articles in many areas of economics, especially econometrics. It is published by Wiley-Blackwell on behalf of the Econometric Society. The current editor-in-chief is ...
'' and the ''
Journal of Political Economy
The ''Journal of Political Economy'' is a monthly peer-reviewed academic journal published by the University of Chicago Press. Established by James Laurence Laughlin in 1892, it covers both theoretical and empirical economics. In the past, the j ...
''.
Demsetz taught at the
University of Michigan
, mottoeng = "Arts, Knowledge, Truth"
, former_names = Catholepistemiad, or University of Michigania (1817–1821)
, budget = $10.3 billion (2021)
, endowment = $17 billion (2021)As o ...
(1958–60), UCLA, 1960–63, and the Graduate School of Business at the
University of Chicago
The University of Chicago (UChicago, Chicago, U of C, or UChi) is a private research university in Chicago, Illinois. Its main campus is located in Chicago's Hyde Park neighborhood. The University of Chicago is consistently ranked among the ...
, 1963–71. In 1971, he returned permanently to UCLA's Economics Department, which he chaired 1978–80. He held the Arthur Andersen UCLA Alumni Chair in Business Economics, 1986–95. He has been affiliated with the
Center for Naval Analyses and the
Hoover Institution
The Hoover Institution (officially The Hoover Institution on War, Revolution, and Peace; abbreviated as Hoover) is an American public policy think tank and research institution that promotes personal and economic liberty, free enterprise, and ...
.
Demsetz was a fellow of the
American Academy of Arts and Sciences
The American Academy of Arts and Sciences (abbreviation: AAA&S) is one of the oldest learned societies in the United States. It was founded in 1780 during the American Revolution by John Adams, John Hancock, James Bowdoin, Andrew Oliver, ...
, a director of the
Mont Pelerin Society
The Mont Pelerin Society (MPS) is an international organization composed of economists, philosophers, historians, intellectuals and business leaders. Michael Novak, 'The Moral Imperative of a Free Economy', in '' The 4% Solution: Unleashing the ...
, and a past (1996) president of the Western Economics Association.
Work
Demsetz belonged to the
Chicago school of economic theory, and was one of the pioneers of the approach now called
New Institutional Economics
New Institutional Economics (NIE) is an economic perspective that attempts to extend economics by focusing on the institutions (that is to say the social and legal norms and rules) that underlie economic activity and with analysis beyond earlier ...
. He is a founder of the field of
managerial economics. He has expanded the theory of
property rights
The right to property, or the right to own property (cf. ownership) is often classified as a human right for natural persons regarding their possessions. A general recognition of a right to private property is found more rarely and is typically ...
now prevalent in
law and economics
Law and economics, or economic analysis of law, is the application of microeconomic theory to the analysis of law, which emerged primarily from scholars of the Chicago school of economics. Economic concepts are used to explain the effects of laws ...
. Even though Demsetz never employed
game theory
Game theory is the study of mathematical models of strategic interactions among rational agents. Myerson, Roger B. (1991). ''Game Theory: Analysis of Conflict,'' Harvard University Press, p.&nbs1 Chapter-preview links, ppvii–xi It has applic ...
, he is a major figure in
industrial organization
In economics, industrial organization is a field that builds on the theory of the firm by examining the structure of (and, therefore, the boundaries between) firms and markets. Industrial organization adds real-world complications to the pe ...
through his writings on the
theory of the firm
The theory of the firm consists of a number of economic theories that explain and predict the nature of the firm, company, or corporation, including its existence, behaviour, structure, and relationship to the market. Firms are key drivers in eco ...
,
antitrust policy, and business
regulation
Regulation is the management of complex systems according to a set of rules and trends. In systems theory, these types of rules exist in various fields of biology and society, but the term has slightly different meanings according to context. Fo ...
. His expository style is devoid of mathematical formalism to an extent unusual for someone who began his career after 1950. His principal influences include
Frank Knight
Frank Hyneman Knight (November 7, 1885 – April 15, 1972) was an American economist who spent most of his career at the University of Chicago, where he became one of the founders of the Chicago School. Nobel laureates Milton Friedman, George ...
and a number of colleagues:
Armen Alchian
Armen Albert Alchian (; April 12, 1914February 19, 2013) was an American economist. He spent almost his entire career at the University of California, Los Angeles (UCLA). A major microeconomic theorist, he is known as one of the founders of new in ...
,
Ronald Coase
Ronald Harry Coase (; 29 December 1910 – 2 September 2013) was a British economist and author. Coase received a bachelor of commerce degree (1932) and a PhD from the London School of Economics, where he was a member of the faculty until 1951. ...
,
Aaron Director
Aaron Director (; September 21, 1901 – September 11, 2004) was a Russian-born American economist and academic who played a central role in the development of the field Law and Economics and the Chicago school of economics. Director was a profe ...
, and
George Stigler
George Joseph Stigler (; January 17, 1911 – December 1, 1991) was an American economist. He was the 1982 laureate in Nobel Memorial Prize in Economic Sciences and is considered a key leader of the Chicago school of economics.
Early life and e ...
.
Demsetz coined the term "
nirvana fallacy
The nirvana fallacy is the informal fallacy of comparing actual things with unrealistic, idealized alternatives. It can also refer to the tendency to assume there is a perfect solution to a particular problem. A closely related concept is the "per ...
" in 1969.
The 1972 Demsetz and
Armen Alchian
Armen Albert Alchian (; April 12, 1914February 19, 2013) was an American economist. He spent almost his entire career at the University of California, Los Angeles (UCLA). A major microeconomic theorist, he is known as one of the founders of new in ...
article ''Production, Information Costs and Economic Organization'' was selected as one of the twenty most important articles published in the first century of the ''American Economic Review''.
Major publications
* 1967, "Toward a Theory of Property Rights," ''American Economic Review''.
* 1968, "Why Regulate Utilities?" ''Journal of Law and Economics''.
* 1969, "Information and Efficiency: Another Viewpoint," ''Journal of Law and Economics''.
* 1972, (with
Armen Alchian
Armen Albert Alchian (; April 12, 1914February 19, 2013) was an American economist. He spent almost his entire career at the University of California, Los Angeles (UCLA). A major microeconomic theorist, he is known as one of the founders of new in ...
, "Production, Information Costs and Economic Organization", ''American Economic Review''.
* 1973, "Industry Structure, Market Rivalry and Public Policy," ''Journal of Law and Economics''.
* 1974, "Two systems of belief about monopoly," in H. Goldschmid, et al., eds., Industrial Concentration: The New Learning, Boston: Little Brown, also chapter 7 in, Demsetz, Harold. Efficiency, Competition, and Policy. Cambridge MA: Basil Blackwell, 1989.)
* 1979, "Accounting for Advertising as a Barrier to Entry," ''Journal of Business''.
* 1982, ''Economic, Legal, and Political Dimensions of Competition''.
* 1988, ''The Organization of Economic Activity'', 2 vols. Blackwell. Reprints most of Demsetz's better known journal articles published as of date.
* 1994, (with
Alexis Jacquemin). ''Anti-trust Economics: New Challenges for Competition Policy''.
* 1995, ''The Economics of the Business Firm: Seven Critical Commentaries''.
* 1997, "The Primacy of Economics: An Explanation of the Comparative Success of Economics in the Social Sciences" (Presidential Address to the Western Economics Association), ''Economic Inquiry''.
* 2011, "From Economic Man to Economic System: Essays on Human Behavior and the Institutions of Capitalism"
References
External links
Brief biography of Demsetzon the web site of UCLA's Economics Department.
{{DEFAULTSORT:Demsetz, Harold
1930 births
2019 deaths
Writers from Chicago
Law and economics scholars
Scholars of competition law
20th-century American economists
21st-century American economists
University of California, Los Angeles faculty
University of Illinois Urbana-Champaign alumni
Kellogg School of Management alumni
University of Michigan faculty
University of Chicago faculty
New institutional economists
Fellows of the American Academy of Arts and Sciences
Distinguished Fellows of the American Economic Association
20th-century American Jews
21st-century American Jews
Member of the Mont Pelerin Society