The Nobel Committee has given two American researchers the coveted Nobel Prize for Economics in recognition for their study of how economic governance is conducted in communities – including companies and society at large. Elinor Ostrom of Indiana University and Oliver Williamson of UC Berkeley were given the honour for their work on how local decision making and structures can help alleviate economic problems

Prof Ostrom’s research is seen to be a counter-argument to the dominant theory popularised since the 1970s of the "tragedy of the commons" – which states that resources need ownership otherwise shared usage will lead to overexploitation and destruction. However, in her studies Ostrom showed that if decisions were to be taken by the grassroots on shared resources, then all parties will be able to come up with common agreements on how best to use them.

Similarly, in his studies, Prof. Williamson has highlighted how large companies have established the structures that allow them to better resolve conflicts and to govern themselves thus increasing efficiency. He also argued that in cases of when too large companies may abuse their position such as monopolies, the solution should not be to break them up but to introduce industry regulations to keep them in check.

All in all, the Economics Prize this year is a marked change from the study of markets that has been the dominant theme of previous Nobels. Some have also observed that both winners have put forward theories that seem to favour group or internal regulation as being more effective than external ones. A judgement perhaps on how regulatory failures led to the current crisis.