When the Committee awarded The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel to Ronald H. Coase in 1991, they referred to his two most cited papers ‘The nature of the firm’ (1937a) and ‘The problem of social cost’ (1960) as their main motivation for the award. Coase himself, in his lecture accepting the award (‘The institutional structure of production’, 1992) also focused on these two papers. There is a good reason for this: these two papers first developed the concept of transaction costs. Transaction costs are central to all modern analysis of the organizational arrangements needed to produce and deliver goods and services, and have progressively permeated numerous other areas of economic analysis, from the examination of costs and benefits of public policies and regulations to the study of the institutions in which economic activities are embedded. The 1960 paper also introduced the economic role of property rights, which became a central component in the law and economics research program.