Electric power sectors around the world have changed dramatically in the last 25 years as a result of sector liberalization policies. Many electricity sectors are now pursuing deep decarbonization goals which will entail replacing dispatchable fossil generation primarily with intermittent renewable generation (wind and solar) over the next 20–30 years. This transition creates new challenges for both short-term wholesale market design and investment incentives consistent with achieving both decarbonization commitments and security of supply criteria. Thinking broadly about the options for institutional change from a Williamsonian perspective – thinking like Williamson – provides a useful framework for examining institutional adaptation. Hybrid markets that combine ‘competition for the market’ that relies on competitive procurement for long-term purchased power agreements with wind, solar, and storage developers, ideally in a technology neutral fashion, and ‘competition in the market’ that relies on short-term markets designed to produce efficient and reliable operations of intermittent generation and storage, is identified as a promising direction for institutional adaptation. Many auction, contract, and market integration issues remain to be resolved.

Professor Hodgson in his review of my A Culture of Growth (Princeton University Press, 2016) raises a number of important issues. One of them is the usefulness of the concept of a ‘market for ideas’ as an analytical tool in discussing the way cultural change affects economic change. Even though there is no price mechanism that clears the market, many basic components of the economic analysis of markets carry through and enriched by evolutionary concepts. A second question is the importance of cultural entrepreneurs, who play an important role in my book. It should be stressed that such ‘Vital Few’ were rarely indispensable, yet their influence on subsequent events may have imparted a direction on events and accelerated them. In any event, the success of such entrepreneurs was an indication of an intellectual environment sufficiently open to new ideas to be consistent with major new ideas such as the possibility and desirability of sustained economic progress.

I share the view expressed by Simon Deakin, David Gindis, and Geoffrey Hodgson (‘DGH’) that social scientists need to consider the constitutive role of law in their disciplines. This is particularly the case for economists working on the theory of the firm and on institutions more generally. Their analyses are often built on assumptions about the legal system which do not correspond to reality. One major issue is the generalized confusion between the concepts of ‘corporation’ and ‘firm’. In day-to-day parlance, the two words are synonyms. But, when the constitutive role of law is considered, the word corporation corresponds to a specific legal device which should be clearly differentiated from a less-specific concept which can be called a ‘firm’ or an ‘enterprise’. The notion of firm usually corresponds to the economic organization of various resources via contracts to produce goods or services. The corporation is a legal institution with peculiar characteristics, including a potentially eternal legal personality, an asset partitioning effect, and several layers of separations of ownership and control. Corporations are often used to legally structure large firms because they are very efficient legal devices to concentrate capital. But, firms are practically and conceptually different from the corporation(s) used to structure them. DGH consider that the understanding of what a firm is should not go against general, day-to-day understanding. In their view, although not all firms are corporations, all corporations are firms. I disagree. Only by clearly explaining that corporations are not firms can lawyers help social scientists consider the constitutive role of the law of corporations in the structuring of our present-day economy.

Critiques of the meritocracy have centered on its narrow definition and biased assessment of merit, its stigmatization of the unsuccessful, and excessive competition. This paper identifies a different mechanism that could have pernicious social and political consequences. Economic mobility sorts people based on certain ‘productive’ traits, separating them into classes, and thus alters social externalities. This sorting–separation–externalities mechanism can produce between-class polarization in social outcomes (e.g. alcoholism and drug abuse) and worsen aggregate outcomes over all classes, consistent with rising ‘deaths of despair’ in the United States (Case and Deaton, 2020, Deaths of Despair and the Future of Capitalism. Princeton University Press). When traits are endogenous, transition out of a caste-based society produces an initial burst of economic mobility which dissipates over time. Thus, a dynamic meritocratic society devolves into a static class-based society. I set out an alternative model called the ‘experimental society’, which is less susceptible to these problems.

Despite agreement on many points, including our shared insistence that ‘corporation’ and ‘firm’ are different concepts, Jean-Philippe Robé still maintains that they are mutually exclusive: no corporation is a firm, and no firm is a corporation. In contrast, we follow standard nomenclature when we point out that all (business) corporations are firms, but some firms are not corporations. We show here that this is a standard practice among lawyers writing in leading law journals and note that Robé seems to have abandoned the task of defining the firm.