This chapter discusses the pervasive methodological implications of Ronald H. Coase’s contribution to economics and the law.

Coase’s reconceptualization of the firm as an institutional device to minimize transaction costs has trig­gered an entire field of research. The traditional view of production, where labour and capital are the primary inputs, is refocused and replaced by the important role of governance structures in firms. Similarly, Coase’s assertion that an initial assignment of property rights is often irrelevant to overall welfare has occasioned one of the most intense and fascinating debates in the history of legal and economic thought. In the following pages, I shall exam­ine the state of legal and economic scholarship in the wake of Coase’s well-known methodological breakthroughs.