Liberty Fund is proud to present, in two volumes, The Collected Works of Armen A. Alchian, bringing together Alchian’s most influential essays, articles, editorials, and lectures to provide a comprehensive record of his thinking on a broad range of topics in economics.
The first of two volumes, Choice and Cost under Uncertainty, is a collection of Alchian’s major scholarly articles, some short papers published in nontechnical periodicals, and some monographs from his years at the RAND Corporation. These papers range over topics from the energy crises to linear progress curves, yet all focus on the effect of the individual on markets and costs through various decision-making processes. This volume also presents Alchian’s unique work on the effects of inflation.
“Obscurities, ambiguities, and errors exist in coat and supply analysis despite, or because of, the immense literature on the subject. Especially obscure are the relationships between cost and output, both in the long run and in the short run. Propositions designed to eliminate some of these ambiguities and errors are presented in this paper. More important, these suggested propositions seem to be empirically valid.”
Armen A. Alchian
Armen Albert Alchian (1914) is an American economist and an emeritus professor of economics at the University of California, Los Angeles (UCLA).
In 1946, he joined the Economics Department at UCLA, where he spent the rest of his career. For many years, he was affiliated with the Rand Corporation. In 1996, he became a Distinguished Fellow of the American Economic Association.
Alchian is the founder of the "UCLA tradition" in economics, a member of the Chicago School of Economics, and one of the more prominent price theorists of the second half of the 20th century. He is the author of pathbreaking articles on information and uncertainty, and the theory of the firm. Through his writings on property rights and transition costs, he is a founder of the new institutional economics. A surprising fraction of Alchian's writings have touched on topics conventionally viewed as macroeconomic: money, inflation, unemployment, and the theory of business investment. His writings are characterized by lucid witty exposition and a minimum of mathematical formalism.
Alchian is the coauthor (with William Allen) of the curious and influential introductory economics text Exchange and Production. This was the first American introductory text to discuss information, transaction costs, property rights, and a market economy as a discovery process. This text also contains the classic statement of what has come to be known as the Alchian-Allan Theorem. This proposition, colloquially known as "ship the good apples out," states that when output varies in quality, the lower quality output is consumed nearby while the higher quality output is shipped long distances. The reason is simple: transportation costs vary with the weight and bulk, but not the quality, of that which is transported. The added per-unit amount decreases the relative price of the higher-grade product.