No institution is a free lunch: a reconstruction of Ronald Coase

The two major contributions of Ronald Coase, written at distant points of his long life, have been often interpreted as different and, somehow, contradicting views of the merits of the market mechanism. We argue that the underlying point of the two articles is the same, and it can be summarized by the statement that no institution is a free lunch. When the unity of the Coasian theory is properly understood, it offers a powerful challenge to standard neoclassical production theory and opens new analytical tools to understand and to compare the institutions of production.