The transaction costs of semi-public institutions : railway history as a challenge for coase

In the social sciences, there are two things one can do with a theory and the aspect of reality it is meant to explain: one can use the theory to improve reality2, or one can use reality to improve the theory. The purpose of the present thesis is very much to do the latter. The empirical problem concerns the proper scope of government3, which we will use to examine the new institutional economics (hereafter: NIE) as it was developed starting with the work of Ronald Coase.4 For reasons that will be explained below, we will focus particularly on the history of the railway industry in Western Europe.