The plan of the paper is to draw out similarities in the two schools and highlight and emphasize the differences between Stigler and what became known as the Virginia School. There are a number of examples. Stigler explicitly broke with Frank H. Knight in ways that James M. Buchanan certainly did not. Further to this point, Stigler is a neoclassical economist, while his colleague Ronald H. Coase, a leading figure of the New Institutionalist School, has both Virginia and Chicago roots. Coase like Stigler contributed to both schools of doctrine.
The paper provides biographical information and background on Stigler’s training and work. We discuss Stigler’s place in the Chicago school and highlight Stigler’s break with Knight and Buchanan. We provide a broad description of what the Chicago school of economics stands for, its scholars, spores who carried the doctrines to other schools, and influences of major Chicago figures such as Viner, Simons, Knight, Director, and others. We also discuss what the Virginia school of political economy stands for, its major players (Knight, Simons, and Viner), and its Chicago spores (Buchanan, G. Warren Nutter, Tullock, Rutledge Vining).
The paper also focuses on the theories of voting and redistribution and of regulation and organized interest groups of Stigler and foundations of the Virginia public choice school. We discuss Stigler’s “De gustibus non est disputandum” principle for “dependence goods” and the “opportunity cost of choices” principles developed by Buchanan and Coase. Stigler’s major contributions include his work on the economics of information and industrial economics which we contrast with Coasean transaction costs and Coase’s theory of firms. We also discuss Stigler, Buchanan and the Coase theorem.