Ostrom was the first woman to win Nobel Memorial Prize in Economic Sciences since it was founded in 1968, and the fifth woman to win a Nobel award this year _ a record for the prestigious honors.
It was also an exceptionally strong year for the United States, with 11 American citizens _ some of them with dual nationality _ among the 13 Nobel winners, including President Barack Obama, who won the Nobel Peace Prize on Friday.
The academy said over the last three decades, the work done by Ostrom and Williamson had "advanced economic governance research from the fringe to the forefront of scientific attention." It said their research showed that economic analysis can shed light on most forms of social organization.
Issues of governance have been at the heart of the ongoing world economic crisis. The failure by boards of directors, for instance, to police excessive compensation, or prevent bonuses that reward excessive risk taking, can be considered a corporate governance issue.
Ostrom, working out of Indiana University's Workshop in Political Theory and Policy Analysis, devoted her career to studying the interaction of people and natural resources. Bucking common theory, she demonstrated how common resources can be successfully managed by groups using it, the Royal Swedish Academy of Sciences said.
Williamson, who is at the Walter A. Haas School of Business at the University of California, Berkeley, was cited for his studies on how organizations _ including companies _ are structured and how that affects the cost of doing business.
Ostrom told the academy by telephone that she was surprised by their choice.
"There are many, many people who have struggled mightily and to be chosen for this prize is a great honor," she said. "I'm still a little bit in shock."
Williamson, 77, said he was "gratified" by the honor.
"One of the benefits I think that will accrue, or at least I hope will accrue, is that organizations will play a more prominent role in the study of economic activity in the near future," he said.
According to Williamson's theory "large private corporations exist primarily because they are efficient. They are established because they make owners, workers, suppliers, and customers better off than they would be under alternative institutional arrangements," the academy said.
"When corporations fail to deliver efficiency gains, their existence will be called in question," it added. "Large corporations may, of course, abuse their power. They may for instance, participate in undesirable political lobbying and exhibit anticompetitive behavior."
But based on Williamson's findings, it is better to regulate such behavior directly rather than with policies that restrict the size of corporations, the academy said.
The academy praised Ostrom for her innovative work.
"Elinor Ostrom has challenged the conventional wisdom that common property is poorly managed and should be either regulated by central authorities or privatized," the academy said. "Based on numerous studies of user-managed fish stocks, pastures, woods, lakes, and groundwater basins, Ostrom concludes that the outcomes are, more often than not, better than predicted by standard theories."
One notable publication Ostrom wrote in 1990 examined both successful and unsuccessful ways of governing natural resources _ forests, fisheries, oil fields, grazing lands and irrigation system _ that are used by individuals.
Williamson previously was a consultant to the U.S. Federal Trade commission from 1978-1980 and special economic assistant to the Assistant Attorney General for Antitrust at the U.S. Department of Justice in 1966-1967.
The economics prize wa the last Nobel award to be announced this year. It's not one of the original Nobel Prizes, but was created by the Swedish central bank in Alfred Nobel's memory.
Nobel Prize winners receive 10 million Swedish kronor ($1.4 million), a gold medal and diploma from the Swedish king on Dec. 10, the anniversary of Nobel's death in 1896.
The choice of Obama was the biggest surprise of this year's awards.
In other awards, American scientists Elizabeth H. Blackburn, Carol W. Greider and Jack W. Szostak shared the Nobel Prize in medicine for discovering a key mechanism in the genetic operations of cells, an insight that has inspired new lines of research into cancer.
The physics prize was split between Charles K. Kao, who helped develop fiberoptic cable, and Americans Willard S. Boyle and George E. Smith who invented the "eye" in digital cameras.
Americans Venkatraman Ramakrishnan and Thomas Steitz and Ada Yonath of Israel shared the chemistry prize for their atom-by-atom description of ribosomes.
Romanian-born German writer Herta Mueller won the literature prize for works that drew widely on her experiences _ a mother who was deported to Siberia and spent five years in a communist gulag, and her own torment after refusing to become an informant for Romania's Securitate secret police.
AP Writers Malin Rising in Stockholm and Jeannine Aversa in Washington contributed to this report.
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