The most prominent financial analyst of law is 1991 Nobel Prize winner Ronald Coase, whose first major article, The Nature of the Firm , argued that the explanation for the existence of corporations (companies, partnerships, and so forth.) is the existence of transaction costs. Rational individuals trade by way of bilateral contracts on open markets until the prices of transactions imply that utilizing firms to produce things is more cost-effective. His second main article, The Problem of Social Cost , argued that if we lived in a world with out transaction costs, folks would cut price with one another to create the same allocation of sources, whatever the method a court docket might rule in property disputes. Coase used the example of a nuisance case named Sturges v Bridgman, the place a loud sweetmaker and a quiet doctor had been neighbours and went to court docket to see who should …