Journal articles: 'Transaction costs theory'

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Frolov, D. P. "From transaction costs to transaction value: Overcoming the frictional paradigm." Voprosy Ekonomiki, no. 8 (August 3, 2020): 51–81. http://dx.doi.org/10.32609/0042-8736-2020-8-51-81.

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The transaction cost economics has accumulated a mass of dogmatic concepts and assertions that have acquired high stability under the influence of path dependence. These include the dogma about transaction costs as frictions, the dogma about the unproductiveness of transactions as a generator of losses, “Stigler—Coase” theorem and the logic of transaction cost minimization, and also the dogma about the priority of institutions providing low-cost transactions. The listed dogmas underlie the prevailing tradition of transactional analysis the frictional paradigm — which, in turn, is the foundation of neo-institutional theory. Therefore, the community of new institutionalists implicitly blocks attempts of a serious revision of this dogmatics. The purpose of the article is to substantiate a post-institutional (alternative to the dominant neo-institutional discourse) value-oriented perspective for the development of transactional studies based on rethinking and combining forgotten theoretical alternatives. Those are Commons’s theory of transactions, Wallis—North’s theory of transaction sector, theory of transaction benefits (T. Sandler, N. Komesar, T. Eggertsson) and Zajac—Olsen’s theory of transaction value. The article provides arguments and examples in favor of broader explanatory possibilities of value-oriented transactional analysis.

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Derlytsia, Andrii. "THE CONCEPTUAL FOUNDATIONS OF TRANSACTIONAL ANALYSIS OF PUBLIC FINANCE." Economic Analysis, no. 30(3) (2020): 72–80. http://dx.doi.org/10.35774/econa2020.03.072.

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Introduction. One of the least developed areas of the theory of economic institutionalism is transactional analysis of public finance. Its component – the theory of transaction costs, is mainly applied to the sphere of functioning of economic entities and the financial market. This necessitates the study of transactions in public finance as an economic phenomenon that requires an integrated approach and goes beyond purely transaction costs. The purpose of the article. The aim is to study the conceptual foundations, method and key areas of transactional analysis of public finance as a scientific field of institutional research. Method. To achieve this goal, the following general scientific methods were used: scientific abstraction, in highlighting the essential features of transactional analysis of public finance; comparative analysis, when assessing the differences in transaction costs in the public and market sectors; a systematic approach in identifying the components of transactional analysis of public finance. Results. Transactional analysis of public finance as a component of institutional research of public finance is considered. The role of transaction costs in the public sphere is shown and their ability to positively influence the efficiency of public finance due to the optimization of resource allocation in the public sector is substantiated. It is indicated that transaction costs in the public sphere are a necessary element to ensure compliance with supply and demand of public goods and other state services, which leads to increased utility of participants in collective interaction. The characteristic of the method of transactional analysis of public finance and its features is given. The main directions of transactional analysis of public finance from the standpoint of comparison of transaction costs, transaction losses and transaction benefits are outlined. The dualistic nature of transaction costs in relation to transformation costs is shown.

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Lu, Xiaohe. "Incomplete Contracts and Stakeholder Theory." Business and Professional Ethics Journal 38, no. 3 (2019): 321–38. http://dx.doi.org/10.5840/bpej201982086.

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If market transactions are optimal, why do so many transactions occur within firms themselves? Ronald H. Coase explains this phenomenon by arguing that market transaction costs differ from intra-company transaction costs and that clear intra-intra-firm property rights have the effect of reducing transaction costs. But what exactly are the relevant transaction costs, and what factors determine them? Oliver Hart argues that market contracts are incomplete, and that the key to improving efficiency is putting the power to deal with these unspecified circumstances into the hands of owners within the same entity.In this paper, I argued that, the development of the theory and practice of business ethics as well as China’s innovative practice in recent decades provide a new perspective, one that is especially relevant to the issues raised by Case and Hart and that bear directly on the reform of China’s state-owned enterprises.

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Malin, Eric, and David Martimort. "Transaction Costs and Incentive Theory." Revue d’économie industrielle 92, no. 1 (2000): 125–48. http://dx.doi.org/10.3406/rei.2000.1043.

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Lleo, Sébastien. "Asymptotic Theory of Transaction Costs." Quantitative Finance 18, no. 8 (July 9, 2018): 1261–62. http://dx.doi.org/10.1080/14697688.2018.1475617.

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Deng, Meie, and Anlu Zhang. "Effect of Transaction Rules on Enterprise Transaction Costs Based on Williamson Transaction Cost Theory in Nanhai, China." Sustainability 12, no. 3 (February 5, 2020): 1129. http://dx.doi.org/10.3390/su12031129.

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The high transaction costs due to the incomplete information and transaction rules of the rural collective construction land (RCCL) market indicate that the government must improve the rural collective construction land market. Transaction rules are an important means for the government to intervene in the market and promote the development of market order, to secure land tenure, and to improve the disclosure of information. Vertical integration may reduce enterprise transaction costs but will increase the governance cost of internal organizations in enterprises. Land commercialization and corporate governance restructuring is a considerable challenge worldwide. Using a field survey in Nanhai district, Guangdong province, China, we estimated how the transaction costs of the RCCL are influenced not only by three dimensions of transaction rules—openness, equity, and justice—but also by the human asset in EC or EJC. Tobit models were constructed, and the results show that (1) the greater number of collective leaders, the higher the enterprise transaction cost (human asset in EC or EJC increases transaction costs of enterprises) and (2) the transaction rules are not sufficiently open or fair, which leads to high costs of market information searching, opportunism, and corruption. The transaction information is not transparent and the lag in transaction supervision mode gives rise to unfair transactions, in which the formation mode of land price is unreasonable. Therefore, we suggest that the transaction rules of RCCL market should be further improved in the three dimensions of openness, equity, and justice. Chinese authorities should strengthen their current efforts to build a more open and fair market by reducing the transaction costs of enterprises and improving the transaction efficiency. Our work provides some insights into the improvement of market efficiency which will contribute to the development of the RCCL market in other areas of China and worldwide.

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Kleiner, Georgе B. "Coase’s Transactional Principle in The Light of System Economic Theory." Journal of Institutional Studies 13, no. 3 (September 25, 2021): 006–19. http://dx.doi.org/10.17835/2076-6297.2021.13.3.006-019.

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The problem of optimization of transaction costs is investigated in the article from system economic theory. The concept of a transaction is interpreted as an interaction that affects the products’ seller and the products’ buyer and the immediate system environment of each of them. The representation of such an environment in the form of a tetrad, which is a relatively stable complex of four basic subsystems of object, project, process, and environmental types, makes it possible to trace the consequences of the transaction impulse in the economic zone of the seller and the buyer. Based on the systemic expansion of the concept of transaction, we analyze the transaction costs and benefits arising from the transaction in all four subsystems of the internal space of the firm and its immediate external environment. When formulating the modified Coase’s transactional principle, which determines the optimal size of a firm depending on the ratio between transactional (external) and administrative (internal) costs, we take into account the change in the firm’s “effect of influence” on the immediate environment as boundaries of the firm expand. Considering the “effect of influence” becomes especially important in the context of the growing development of the ecosystem form of organizing economic interaction, characterized by an increased density and tightness of intersubjective relations within the ecosystem. Attention is drawn to the positive aspects of “institutional friction” in the economy, which allows a new approach to determining the optimal level of transaction costs. The expediency of considering the “double tetrad” as a combination of the seller’s tetrad and the buyer’s tetrad as a system unit of market analysis is substantiated.

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Cordelia, Antonio. "Transaction Costs and Information Systems: Does IT Add Up?" Journal of Information Technology 21, no. 3 (September 2006): 195–202. http://dx.doi.org/10.1057/palgrave.jit.2000066.

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Transaction cost theory has often been used to support the use of information and communication technology (ICT) to reduce imperfection in the economic system. Electronic markets and hierarchies have repeatedly been described as solutions to inefficiencies in the organisation of transactions in complex and uncertain settings. Far from criticising this assumption, this paper highlights the limits associated with this application of transaction cost theory that has been prevalent in IS research. Building on the concepts first proposed by Ciborra, the paper argues that information-related problems represent only some of the elements contributing to transaction costs. These costs also emerge due to the interdependencies among the various factors contributing to their growth. The study of the consequences associated with ICT design and implementation, grounded in transaction cost theory, should consider the overall implication associated with the adoption and use of ICT and not only the direct effect on problems associated with information flow, distribution, and management.

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Zhuang, Taozhi, Queena K. Qian, Henk J. Visscher, and Marja G. Elsinga. "An analysis of urban renewal decision-making in China from the perspective of transaction costs theory: the case of Chongqing." Journal of Housing and the Built Environment 35, no. 4 (February 18, 2020): 1177–99. http://dx.doi.org/10.1007/s10901-020-09733-9.

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Abstract In China, there is a growing number of urban renewal projects due to the rapid growth of the economy and urbanization. To meet the needs of urban development, urban renewal requires a sound decision-making approach involving various stakeholder groups. However, current urban renewal decision-making is criticized for poor efficiency, equity, and resulting in many unintended adverse outcomes. It is claimed that high-level transaction costs (e.g., a great deal of time spent on negotiation and coordination) are the factors hidden behind the problems. However, few studies have analyzed urban renewal decision-making in a transaction costs perspective. Using the case of Chongqing, this paper aims at adopting transaction costs theory to understand the administrative process of urban renewal decision-making in China. This research focuses on four key stakeholder groups: municipal government, district government, local administrative organizations, and the consulting parties. A transaction costs analytical framework is established. First, the decision-making stages of urban renewal and involved key stakeholder groups are clarified. Second, the transactions done by different stakeholder groups in each stage is identified, thus to analyze what types of transaction costs are generated. Third, the relative levels of transaction costs among different stakeholder groups were measured based on the interview. The empirical analysis reveals how transaction costs occur and affect urban renewal decision-making. Finally, policy implications were proposed to reduce transaction costs in order to enhance urban renewal.

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Lai, Tze Leung, and Tiong Wee Lim. "Option hedging theory under transaction costs." Journal of Economic Dynamics and Control 33, no. 12 (December 2009): 1945–61. http://dx.doi.org/10.1016/j.jedc.2009.04.007.

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Kraciuk, Jakub. "OFFSHORING IN THE TRANSACTION COSTS THEORY." Ekonomia i Prawo 13, no. 1 (March 31, 2014): 71. http://dx.doi.org/10.12775/eip.2014.006.

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Sanchez, Ron. "Integrating transaction costs theory and real options theory." Managerial and Decision Economics 24, no. 4 (2003): 267–82. http://dx.doi.org/10.1002/mde.1124.

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PLOTNIKOV, Viktor S., and Saule S. KANAPINOVA. "Contractual obligations as an element of transaction costs of the exchange deal." International Accounting 24, no. 3 (March 15, 2021): 252–70. http://dx.doi.org/10.24891/ia.24.3.252.

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Subject. This article discusses the issues relating to the reflection of contractual obligations in the accounting system as an economic category of transaction costs. Objectives. The article aims to describe a market-based approach to defining contractual obligations as transaction costs of the organization and the specifics of their separate reflection in the accounting system. It also aims to define the content of the organization's obligations in terms of the rights of claim for economic resources to reduce the gap between accounting theory and institutional theory. Methods. For the study, we used the theory of institutional economics, the Conceptual Framework for Financial Reporting that help expand the scope of accounting by incorporating market relations reflecting the obligations to provide exchange transactions. Results. The article defines and proves the importance of the obligations of the exchange transaction parties to reflect them in the accounting system, and that transaction costs expressed by obligations determine the future rights of the market agents. The economic content of the exchange transaction parties' contractual obligations is significantly different from the accounting understanding of receivables and payables. The article proposes to separate the transaction costs determined by the exchange transaction parties' obligations, subsequently capitalizing and reflecting them in financial (integrated) reporting in the structure of client (reputational) capital. Conclusions. It is necessary and possible to develop the accounting theory by incorporating new economic phenomena, such as the contractual obligations of the exchange transaction parties. This approach will help change the retrospective view of understanding accounting information to some extent.

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Darabi, Hassan, and Danon Jalali. "Illuminating the formal–informal dichotomy in land development on the basis of transaction cost theory." Planning Theory 18, no. 1 (June 5, 2018): 100–121. http://dx.doi.org/10.1177/1473095218779111.

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Transaction cost theory is largely used to investigate the formal domain of land and housing. In the informal domain, however, this perspective has been employed largely as a supplement in addressing the other fundamental notion in new institutional economics—property rights—despite the possibility that informality in land development can emerge regardless of the informality or formality of such rights. To cover this gap, this study developed a theoretical framework based on transaction cost theory to explain the formal–informal dichotomy in land development. The proposed framework maintains that land development depends on engaging in transactions that involve total or partial ownership of a combination of capital and land through lease and/or sale contracts, which enable landowners to earn from the new rental prices produced by the increase in land prices. Landowners are afforded two avenues from which to reduce transaction costs, namely, formal and informal institutional frameworks, each defining and enforcing restrictive rules on agents’ actions. These avenues, however, are simultaneously a source of new transaction costs that can affect the expected financial return of land development. Landowners therefore tend to choose the institutional framework that entails lower transaction costs but enables higher gains. Thus, the higher transaction costs associated with a formal institutional framework are the primary deterrents to the selection of this structure. In turn, informal land development continues to expand, regardless of the existence of formal prohibitive measures. We investigated the formal–informal dichotomy in the rural land development process in Tehran Province, Iran. The results indicated that transaction costs cause inefficiency in formal institutions, thereby driving the perpetuation of informal development.

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VILLAMAYOR-TOMAS, SERGIO. "Disturbance features, coordination and cooperation: an institutional economics analysis of adaptations in the Spanish irrigation sector." Journal of Institutional Economics 14, no. 3 (July 13, 2017): 501–26. http://dx.doi.org/10.1017/s1744137417000285.

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AbstractThis paper explores associations between disturbances and cooperative responses in a selection of irrigation associations from Spain. Transaction costs and collective action theories are used to characterize disturbances and responses. Disturbances are characterized by looking at the uncertainty they generate, their frequency, the distance of the transacting partners they affect, and their impact on asset-specific transactions. Responses are assessed based on the collective action tasks they involve and classified into coordination and cooperation responses. A qualitative comparative analysis confirms two pathways that are sufficient for the emergence of cooperation responses. The first path is congruent with transaction costs theory, and points to disturbances that are frequent and asset specific; the second path supports relational theory, and points to disturbances that emerge progressively from within the system. Other patterns include the tendency of irrigation associations to delegate to external entities when disturbances are external and occur frequently; and the adaptation of existing institutions when the disturbances are internal and progressive.

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Jarka, Sławomir. "THE PROBLEM OF THE OPTIMAL VOLUME OF ENTERPRISE PRODUCTION IN THE LIGHT OF THE THEORY OF TRANSACTION COSTS AND THE PRACTICE OF OUTSOURCING." Acta Scientiarum Polonorum. Oeconomia 17, no. 4 (December 30, 2018): 79–86. http://dx.doi.org/10.22630/aspe.2018.17.4.54.

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The purpose of the article was to determine the importance of outsourcing and transaction costs accompanying it in the process of optimizing company structures. The practical reference of the adopted research objective was to indicate the optimal size of the enterprise. The aim is also to indicate, based on literature research, the impact of the transaction cost theory on the development of outsourcing. The findings of research show that the optimal size of the enterprise corresponds to the production volume at which the transaction function indicates the decreasing level of their marginal product, until the value reaches 0. With a high specificity of the company’s resources, which requires the use of specific technologies, there are transaction costs on this account that shape the price of the goods being the subject of the transaction. Thus, when further increasing the size of the production company, one should also take into account the added transaction costs, among others, control and monitoring of transactions. Modern enterprises focus their actions on key areas of activity. They give up production of what outsourcing providers can do more effectively, leaving what is specific for a given product, determining the company’s identity and the essence of production.

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Nwabuzor, Emmanuel O. "Real Property Security Interests in Nigeria: Constraints of the Land Use Act." Journal of African Law 38, no. 1 (1994): 1–18. http://dx.doi.org/10.1017/s0021855300011426.

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The modern idea of secured transactions is based on the notion of economic efficiency, which implies the minimization of transaction costs while ensuring optimal returns. The efficiency theory posits that unclear definitions and unprotected allocation of property rights inhibit the production of wealth, because they raise the transaction costs of land and impede exchange. The more precisely property rights are stated and assigned, the lower the cost of establishing ownership, and the extent of one's interest in any given piece of land.1 Proceeding from the efficiency theory, contemporary commercial practice is not willing to accommodate the ancient, unnecessarily complicated system of conveyancing, which makes the taking of security in real property expensive. Thus, an efficient regime of secured transactions should be simple, fast, cheap and predictable.

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Deng, Liurui, Lan Yang, and Bolin Ma. "Multi-period Investment Strategies with Transaction Costs Under Cumulative Prospect Theory." Applied Finance and Accounting 5, no. 2 (August 15, 2019): 53. http://dx.doi.org/10.11114/afa.v5i2.4432.

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This paper focuses on optimal investment strategies under cumulative prospect theory (CPT). Considering transaction costs, we investigate CPT investors multi-period optimal portfolios. Our main contributions relative to previous work are expanding a single-period optimization problem to a multi-period optimization problem and investigating the impact of transaction costs on optimal portfolio selections. In a numerical analysis that applied original data on four stocks from the NASDAQ, we examine the effects of different risks on the optimal portfolio. Moreover, in contrast with the results without transaction costs, we come to conclusion that the optimal strategy with transaction costs is less sensitive to risk.

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Frolov, Daniil. "Blockchain and institutional complexity: an extended institutional approach." Journal of Institutional Economics 17, no. 1 (June 16, 2020): 21–36. http://dx.doi.org/10.1017/s1744137420000272.

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AbstractFrom a modern institutional economics viewpoint, blockchain is an institutional technology that minimizes transaction costs and greatly reduces intermediation. Through an analysis of blockchain, I demonstrate the possibilities of extended institutional approach – a new generation of complexity-focused methodologies and theories of institutional analysis that complement and expand the standard institutional paradigm. By using the theory of transaction value, I argue blockchain technologies not only will lead to a significant reduction in transaction costs but will also reorient intermediaries toward improving the quality of transactions and expanding the offer of additional transaction services. The theory of institutional assemblages indicates it is impossible to form a homogeneous system of blockchain-based institutions associated exclusively with the principles of decentralization, transparency, and openness. Blockchain-based institutions will be of a hybrid and conflicting nature, combining elements of opposing institutional logics – regulatory and algorithmic law, Ricardian and smart contracts, private and public systems, and uncontrollability and arbitration.

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Hoang, Dung Phuong, and Thong Huy Vu. "A transaction cost explanation of the card-or-cash decision among Vietnamese debit card holders." International Journal of Bank Marketing 38, no. 7 (March 6, 2020): 1635–64. http://dx.doi.org/10.1108/ijbm-05-2019-0191.

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PurposeThis research provides a new perspective in explaining cardholders' willingness to use debit cards instead of cash by applying the transaction costs economic theory. This study also expands the adaptation of transaction cost economics theory in explaining consumer behaviour by investigating the moderating effects of income and education level on the relationship between perceived transaction costs and willingness to use debit cards.Design/methodology/approachThe conceptual framework was developed primarily from the transaction cost economics theory. An in-depth interview method was employed to further support hypothesis development and the development of measurement scales. A structural equation model linking asset specificity, behavioural uncertainty, environmental uncertainty, frequency of payment, perceived monitoring costs, perceived adaptation costs and willingness to use debit cards was tested using data from a sample of 384 Vietnamese debit card holders.FindingsThis study's results support the transaction cost economics theory that asset specificity, uncertainty and frequency of payment all positively contribute to the perceived transaction costs associated with debit card usage. However, only environmental uncertainty and perceived adaptation costs have significant negative impact on willingness to use debit cards, with the relationship between environmental uncertainty and willingness to use debit cards being totally mediated by perceived adaptation costs. Moreover, the relationship between perceived adaptation costs and willingness to use debit cards becomes less negative among richer and better-educated cardholders.Practical implicationsThe research provides insights into the hidden obstacles for developing cashless economies, thereby supporting policy makers in designing more effective and comprehensive strategies to make debit cards more widely used as a true substitute for cash.Originality/valueThis study provides a new lens in explaining customer willingness to use debit cards, while expanding the transaction costs economics theory by incorporating demographic factors as moderators in the relationship between transaction costs and the card-or-cash choice.

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Czichowsky, Christoph, and Walter Schachermayer. "Duality theory for portfolio optimisation under transaction costs." Annals of Applied Probability 26, no. 3 (June 2016): 1888–941. http://dx.doi.org/10.1214/15-aap1136.

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Hennart, Jean-Francois. "A transaction costs theory of equity joint ventures." Strategic Management Journal 9, no. 4 (July 1988): 361–74. http://dx.doi.org/10.1002/smj.4250090406.

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Wang, Dedong, Shaoze Fang, and Hongwei Fu. "THE EFFECTIVENESS OF EVOLUTIONARY GOVERNANCE IN MEGA CONSTRUCTION PROJECTS: A MODERATED MEDIATION MODEL OF RELATIONAL CONTRACT AND TRANSACTION COST." JOURNAL OF CIVIL ENGINEERING AND MANAGEMENT 25, no. 4 (April 3, 2019): 340–52. http://dx.doi.org/10.3846/jcem.2019.9621.

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Mega construction project governance is an evolutionary process characterized by high transaction costs and complex interrelationships. Based on transaction cost theory, relational contract theory and evolutionary governance theory, this study explored the impact of evolutionary project governance on mega construction project performance by collectively considering the mediating effect of transaction costs and the moderating effect of a relational contract. Partial least squares structural equation modeling was used to test the hypotheses based on data collected from 176 respondents. The results show that evolutionary project governance would be more effective in increasing project performance and reducing transaction costs in the context of a relational contract. Reducing transaction costs is an effective way to improve project performance, and it is an important mediation variable between evolutionary project governance and project performance in the context of a relational contract. The results enrich the theory on mega construction project governance and reduce the imbalance between theory and practice in previous studies.

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Hansen Henten, Anders, and Iwona Maria Windekilde. "Transaction costs and the sharing economy." INFO 18, no. 1 (January 11, 2016): 1–15. http://dx.doi.org/10.1108/info-09-2015-0044.

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Purpose The paper aims to discuss the so-called sharing economy from a business modeling and industrial structure perspective. The illustrative cases examined are Airbnb and Uber. The research question raised is concerned with the extent to which transaction cost theory can be used to explain the changing industrial structures in the application areas that the Internet-based platforms are addressing and how other theoretical frameworks can be helpful in understanding these developments. Design/methodology/approach As the sharing economy topic is relatively new, the paper takes its point of departure in a brief overview of the different issues discussed in the academic literature and the press regarding this emerging phenomenon. The paper presents relevant theoretical approaches to analyzing business models of sharing platforms and industrial structure implications. It, thereafter, presents the cases of Airbnb and Uber to discuss the relevance of the theories put forward. Findings The paper concludes by proposing a theoretical framework for analyzing the structural implications of the sharing economy based on theories on multi-sided platforms, transaction costs and substitution and complementation. Research limitations/implications The research implications are to establish a comprehensive theory framework for analyzing the development of commercial sharing platforms. Originality/value The originality and value of the paper is related to the novelty of topic and the development of a theory framework for analyzing the business models of commercial sharing platforms. Only little has been written from an academic analytical perspective on the sharing economy, and there is a need for developing a coherent framework for analyzing these developments.

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Subirana, Brian, and Patricia Carvajal. "Transaction Streams: Theory and Examples Related to Confidence in Internet-Based Electronic Commerce." Journal of Information Technology 15, no. 1 (March 2000): 3–16. http://dx.doi.org/10.1177/026839620001500102.

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This paper analyses how transactions related to the exchange of goods and services are being performed on the Internet. The adoption of electronic markets in an industry has a disintermediation potential because it can create a direct link between the producer and the consumer (without the need for the intermediation role of distributors). Electronic markets lower the searches cost allowing customers to choose between more providers. This ultimately reduces both the costs for the customer and the profits for the producer. In this paper it is contended that electronic markets on the Internet have the opposite effect, resulting in an increase in intermediators. It introduces transaction streams which model how transactions are being conducted and helps explain the types of new intermediators that are appearing on the Internet. The mechanisms by which companies are exploring ways of extending transaction streams are also described. To illustrate the model, the paper briefly analyses transaction streams in the insurance industry and provides examples related to confidence in electronic commerce.

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Lemanowicz, Marzena. "THEORY OF CONTRACTS IN THE LIGHT OF NEW INSTITUTIONAL ECONOMICS. THE SPECIFICITY OF AGRICULTURAL CONTRACTS." Acta Scientiarum Polonorum. Oeconomia 17, no. 4 (December 30, 2018): 97–104. http://dx.doi.org/10.22630/aspe.2018.17.4.56.

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The article reviews Polish and foreign economic literature regarding new institutional economics (NIE) and various research approaches used in the framework of NIE. Particular attention was paid to the economic theory of contracts and the transaction costs, as the limitation of transaction costs is indeed the main stimulus for contract signing. Special attention was given to agricultural contracts and their specificity. The article discusses different theories applied in the analysis of contracts, characterizes contracts according to different criteria, and draws attention to the importance of transaction costs in the theory of contracts. In addition, factors which contribute to these costs have been identified, indicating the necessity of adapting the principles of transaction cost economics to the needs of the agricultural sector.

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Mahoney, Joseph T. "A resource-based theory of sustainable rents." Journal of Management 27, no. 6 (December 2001): 651–60. http://dx.doi.org/10.1177/014920630102700603.

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This paper summarizes and comments on Conner (1991) that contributes to the strategic management area by providing an historical comparison of resource-based theory and five schools of thought within industrial organization economics. Conner (1991) argues that the fundamental distinction between resource-based theory and transaction costs theory is that resource-based theory focuses on the deployment and combination of specific inputs while transaction costs theory focuses on the avoidance of opportunism. I offer three responses to this claim. First, Conner’s distinction was not central to the resource-based literature at the time the article was published. Second, I raise concerns about building a resource-based theory of the firm that assumes away the problems of opportunistic behavior. Third, I offer an alternative view of the fundamental similarities and differences between resource-based theory and transaction costs theory.

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Zhonghua, Qu, and Michael Brocklehurst. "What Will it Take for China to Become a Competitive Force in Offshore Outsourcing? An Analysis of the Role of Transaction Costs in Supplier Selection." Journal of Information Technology 18, no. 1 (March 2003): 53–67. http://dx.doi.org/10.1080/0268396031000077459.

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Using transaction costs theory this paper argues that transaction costs are almost as significant as production costs when it comes to offshore outsourcing and, moreover, that it is in the field of transaction costs where China has been unable to compete with India in the supply of information technology outsourcing. The paper outlines a framework for analysing transaction costs and uses the framework for pinpointing where China is unable to compete. The paper concludes with a review of the policy implications for the Chinese Government.

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Lukasz, Satola, Wojewodzic Tomasz, and Sroka Wojciech. "Barriers to exit encountered by small farms in light of the theory of new institutional economics." Agricultural Economics (Zemědělská ekonomika) 64, No. 6 (June 15, 2018): 277–90. http://dx.doi.org/10.17221/233/2016-agricecon.

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For at least 25 years, processes involving structural changes have been growing more and more intense in the countries of Central and Eastern Europe, with these processes including a decline in the number of small farms. The main aim of this paper is to present the mechanisms involved in, as well as barriers to and costs preventing the exit of farms from agriculture, including those that make it difficult to transfer production resources which are being released to other companies. This research takes the form of an overview and is based on the output of new institutional economics, and on transaction cost and rent-seeking theories in particular. The most frequent difficulties encountered in the process of exit from farming include low profitability of production and the shortage of capital among potential buyers, while the lack of sellers’ financial resources and the necessity of incurring expenses related to preparing and finalising the sale of resources held by them (the actual transaction costs related to closing down farms) are frequently overlooked. The most important barriers preventing the complete liquidation of farms are the inherent transaction costs categorised as expenses, as well as the emotional costs and costs of alternatives, which are difficult to evaluate and estimate. The following notions are particularly helpful in explaining barriers to exit from farming: the concept of transaction costs and rent-seeking theory, which are both a part of the stream of thought of new institutional economics.

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KAN, STEVEN S. "ENTREPRENEURSHIP, TRANSACTION COSTS, AND SUBJECTIVIST ECONOMICS." Journal of Enterprising Culture 01, no. 02 (November 1993): 159–82. http://dx.doi.org/10.1142/s0218495893000099.

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While researches along the lines of Austrian, Buchanan, and Coase’s teachings are thriving recently, they are not united. We show that conceptions of entrepreneurship and transaction costs are generally ambiguous regarding important exchange relationships because they are limited to the consideration of one-sided individual choices only. It is argued in the paper that the completion of an exchange necessarily involves at least two individuals acting in the role of the entrepreneur. In addition, transaction costs are subjective and cannot be treated as production or transportation costs. The paper distinguishes the concept of production cost from that of transaction cost, which is necessarily associated with alternative exchange or organizational opportunities, and therefore expands Buchanan’s subjectivist conception of individual cost to that of interactive transaction cost. A new definition of transaction cost and its implications to a testable theory of the determination of institutions are presented in the paper. Thus, in contrast to the general impression that entrepreneurship cannot be taught and studied, we show how it can be possible under our synthesis of entrepreneurship, transaction costs, and subjectivist economics. An example is also given to demonstrate how entrepreneurship can be taught and learned under our proposed framework.

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Martinez, Richard J., and M. Tina Dacin. "Efficiency Motives and Normative Forces: Combining Transactions Costs and Institutional Logic." Journal of Management 25, no. 1 (February 1999): 75–96. http://dx.doi.org/10.1177/014920639902500104.

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This paper provides a synthesis of transaction cost economics and institutional theory. It reviews each of these approaches and provides suggestions on how these perspectives might be broadened via this synthesis. It presents an illustrative model of organization theorizing that combines relevant aspects of transaction cost theory and institutional theory in order to strengthen the explanatory power of both. The model explores conditions under which one or both theories may be most appropriate in explaining decision behavior, focusing on two important situational factors--the degree of ambiguity surrounding transaction cost analyses and the organization’s temporal survival orientation.

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Bajari, Patrick, and Steven Tadelis. "Incentives versus Transaction Costs: A Theory of Procurement Contracts." RAND Journal of Economics 32, no. 3 (2001): 387. http://dx.doi.org/10.2307/2696361.

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O. Brown Jr, William. "Transaction costs, corporate hierarchies, and the theory of franchising." Journal of Economic Behavior & Organization 36, no. 3 (August 1998): 319–29. http://dx.doi.org/10.1016/s0167-2681(98)00098-5.

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Ćetković, Jasmina, Slobodan Lakić, Miloš Knežević, Miloš Žarković, and Tatiana Sazonova. "The use of Transaction Costs Theory in Interorganizational Design." MATEC Web of Conferences 53 (2016): 01055. http://dx.doi.org/10.1051/matecconf/20165301055.

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Goryachev, Vadim. "Concept of transaction costs in economic theory and practice." Актуальные направления научных исследований XXI века: теория и практика 3, no. 1 (April 12, 2015): 361–67. http://dx.doi.org/10.12737/10648.

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Gonon, Lukas, Johannes Muhle‐Karbe, and Xiaofei Shi. "Asset pricing with general transaction costs: Theory and numerics." Mathematical Finance 31, no. 2 (February 6, 2021): 595–648. http://dx.doi.org/10.1111/mafi.12297.

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Saravia Matus, Jimmy A., and Silvia Saravia-Matus. "Corporate governance and transaction cost economics: A study of the equity governance structure." Corporate Board role duties and composition 12, no. 1 (2016): 33–44. http://dx.doi.org/10.22495/cbv12i1art4.

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This paper extends the Transaction Cost Economics (TCE) theory of the equity governance structure by introducing a (hitherto absent) full analysis of the key TCE issue of bilateral dependency between the firm and its shareholders. In addition, the paper discusses the implications of the analysis for the topic of corporate governance and firm performance. We find that when bilateral dependency holds contractual hazards are mitigated as predicted by TCE, but that when it does not contractual safeguards are altered to the disadvantage of shareholders and managerial discretion costs increase as reflected by lower firm valuation. Importantly, our study documents for the first time a class of transactions where business relationships persist indefinitely even though transaction costs are not minimized.

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Pesch, Udo, and Georgy Ishmaev. "Fictions and frictions: Promises, transaction costs and the innovation of network technologies." Social Studies of Science 49, no. 2 (March 18, 2019): 264–77. http://dx.doi.org/10.1177/0306312719838339.

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New network technologies are framed as eliminating ‘transaction costs’, a notion first developed in economic theory that now drives the design of market systems. However, the actual promise of the elimination of transaction costs seems unfeasible, because of a cyclical pattern in which network technologies that make that promise create processes of institutionalization that create new forms transaction costs. Nonetheless, the promises legitimize the exemption of innovations of network technologies from critical scrutiny.

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Chellathurai, Thamayanthi, and Thangaraj Draviam. "Dynamic portfolio selection with nonlinear transaction costs." Proceedings of the Royal Society A: Mathematical, Physical and Engineering Sciences 461, no. 2062 (August 23, 2005): 3183–212. http://dx.doi.org/10.1098/rspa.2005.1518.

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The dynamic portfolio selection problem with bankruptcy and nonlinear transaction costs is studied. The portfolio consists of a risk-free asset, and a risky asset whose price dynamics is governed by geometric Brownian motion. The investor pays transaction costs as a (piecewise linear) function of the traded volume of the risky asset. The objective is to find the stochastic controls (amounts invested in the risky and risk-free assets) that maximize the expected value of the discounted utility of terminal wealth. The problem is formulated as a non-singular stochastic optimal control problem in the sense that the necessary condition for optimality leads to explicit relations between the controls and the value function. The formulation follows along the lines of Merton (Merton 1969 Rev. Econ. Stat. 51 , 247–257; Merton 1971 J. Econ. Theory 3 , 373–413) and Bensoussan & Julien (Bensoussan & Julien 2000 Math. Finance 10 , 89–108) in the sense that the controls are the amounts of the risky asset bought and sold, and they are bounded. It differs from the works of Davis & Norman (Davis & Norman 1990 Math. Oper. Res. 15 , 676–713), who use, in the presence of proportional transaction costs, a singular-control formulation in which the controls are rates of buying and selling of the risky asset, and they are unbounded. Numerical results are presented for buy/no transaction and sell/no transaction interfaces, which characterize the optimal policies of a constant relative risk aversion investor. The no transaction region, in the presence of nonlinear transaction costs, is not a cone. The Merton line, on which no transaction takes place in the limiting case of zero transaction costs, need not lie inside the no transaction region for all values of wealth.

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Wink Junior, Marcos Vinício, Hsia Hua Sheng, and William Eid Junior. "Transaction costs: an empirical analysis of their relationship with investment and foreign direct investment." Revista de Administração de Empresas 51, no. 2 (April 2011): 175–87. http://dx.doi.org/10.1590/s0034-75902011000200005.

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As stated by the New Institutional Economics theory, transaction costs play a relevant role in economics and, according to the extent of such costs, agents make investment decisions. Actually, transaction costs may represent a disincentive to entrepreneurship. This work aims to verify whether transaction costs are related to investment rate and foreign direct investment rate (FDI) in different business environments. The results suggest that foreign investors do not have precise information about other countries as domestic investors do; as it is observed, only the relation between transaction costs and investment rate is significant. Furthermore, there is evidence that the business environments of BRIC countries are less developed when compared to business environments of other countries in the study

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Orekhovsky, P. A. "TRANSACTION COSTS AND THEIR EFFECT ON THE SIZE OF THE ENTERPRISE AND THE STRUCTURE OF THE ECONOMY." Economics Profession Business, no. 1 (March 10, 2021): 63–74. http://dx.doi.org/10.14258/epb202108.

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The paper presents a discursive analysis of the use of the category of “transaction costs”. The similarity of the concepts of “transaction costs’ and “costs of the marketing” by E. Chamberlin is demonstrated. However, in the original discourse of R. Coase, transaction costs are considered as the costs of using the price mechanism associated with the market allocation of resources. The firm, as a hierarchical economic system, was an alternative allocation mechanism to the market. The factors that influence the value of transaction costs in O. Williamson’s contract theory are almost unrelated to sales and the marketing. In the discourse of J. Buchanan and M. Olson transaction costs are costs arising in the political market. For J. Buchanan, these are the “positive” costs of creating new laws that reduce the social costs associated with the production and distribution of public goods. M. Olson’s discourse addresses not only the “positive” but also the “negative” costs associated with dividing markets through government regulation. In turn, R. Coase himself, investigating the problem of social costs associated with external effects, in fact got rid of transaction costs, equating them to zero. It is this situation of “Coase’s theorem” that began to be used in the framework of the analysis methodology of the discipline “Economics and Law”. The paper proposes an interpretation of transaction costs as costs of overcoming the boundaries between heterogeneous systems, based on the discourse of E. de Soto. In this case, the prices of legality/illegality can be viewed as the transaction costs of using different economic systems.

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Hu, Chao, Jianping Tao, Donghao Zhang, and Damian Adams. "Price Signal of Tilled Land in Rural China: An Empirically Oriented Transaction Costs Study Based on Contract Theory." Land 10, no. 8 (August 11, 2021): 837. http://dx.doi.org/10.3390/land10080837.

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Prices are effective signals of many market conditions, while underpricing of tilled land in rural China poses a dilemma to this common sense. Using n = 191 imputed contracts in rural China, this paper aims to investigate the role of ambiguous property rights in the context of agricultural reforms. Using rank statistics, several candidate variables in the transaction costs function fc(•) were identified, including BMI (Body Mass Index), Knowledge, Subtraction and Farming Experience. The results show clear evidence for underpricing to restrain competition under ambiguous property rights. More illuminatingly, non-parametric regression analysis specifies a well-founded transaction costs function: increasing Subtraction by one unit increases transaction costs by the equivalent of US$513.40, while a one-year increase of farming experience reduces transaction costs by US$116.20, ceteris paribus. It concludes that social costs behind underpricing are detrimental to China’s rural reform. This study contributes to economic theory, with important implications for policy makers. To encourage smooth transmission of price signals, it is important to consider farmer characteristics and develop professional farmers.

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Merz, Markus. "Contemporaneous financial intermediation." Digital Finance 3, no. 1 (March 2021): 25–44. http://dx.doi.org/10.1007/s42521-021-00029-3.

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AbstractDigital innovations in banking and payments recently have garnered a great deal of attention. Specifically, distributed ledger technology (DLT) has the potential to fundamentally change the roles and responsibilities of stakeholders in the financial sector. DLT is a novel and fast-evolving approach to record and share data, e.g., payment transactions, among members of a decentralized network. Using transaction cost theory, the paper examines how DLT will change the cross-border payment infrastructure. DLT can reduce the overall transaction costs potentially resulting in the disappearance of correspondent banks.

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Jones, Gareth R., and Michael W. Pustay. "Interorganizational Coordination in the Airline Industry, 1925-1938: A Transaction Cost Approach." Journal of Management 14, no. 4 (December 1988): 529–46. http://dx.doi.org/10.1177/014920638801400404.

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Transaction cost theory is used to examine the decision of horizontally linked firms to compete or cooperate in interorganizational exchange. It is argued that this decision depends on those dimensions of the environment that affect the level of transaction costs. Furthermore, it is argued that when transaction costs become too high for voluntary cooperation to occur in the market, firms seek hierarchical or third party solutions for managing interorganizational exchange. A qualitative analysis of the airline industry is presented as a case study that demonstrates empirically the effect of changes in transaction costs on the level of coordination over time.

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Hsieh, Ching-Tang, Hao-Chen Huang, and Wei-Long Lee. "Using transaction cost economics to explain open innovation in start-ups." Management Decision 54, no. 9 (October 17, 2016): 2133–56. http://dx.doi.org/10.1108/md-01-2016-0012.

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Purpose The basic concept of transaction cost theory is that firms like to conduct transactions in a channel with lower transaction costs. Therefore, the purpose of this paper is to use the transaction cost perspective to identify which conditions cause companies to choose between outbound open innovation (hierarchy governance) and inbound open innovation (market governance). Design/methodology/approach Accordingly, transaction cost economics was used to relate the choice and implementation of open innovation using a sample of 250 electronics and information start-ups in China. Structural equation modeling was used to conduct confirmatory factor analysis to evaluate measurement model, while logistic regression analysis was used to test the hypotheses. Findings As expected, the dedicated asset specificity, human asset specificity, behavioral uncertainty, transaction frequency, and small number exchange were positively associated with outbound open innovation. Originality/value The contribution of this paper lies in explaining the role played by transaction cost economics in the process of open innovation for start-ups through empirical analysis.

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Yu, Kangkang, Xinkai Zhu, and Xuan Chen. "Transaction costs and performance variation of agricultural operators." China Agricultural Economic Review 7, no. 3 (September 7, 2015): 374–88. http://dx.doi.org/10.1108/caer-03-2014-0028.

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Purpose – The purpose of this paper is to investigate the relationship between transaction costs and the performance variance of peasant households and specialized cooperatives, as well as to explore whether or not this relationship varies across different regions in China. Design/methodology/approach – Based on the transaction cost theory (TCT) and the contingency theory (CT), a survey was undertaken at county level to support the main effects and moderating effects and the results were analyzed using a general linear model. A complementary case study was also used to further discuss the results. Findings – It was found that the change rate of peasant households’ scope of operation is sensitive to inadequate market information, purchase and sales expense and resolving disputes expense. In terms of specialized cooperatives, the change rate of their scale of operations is sensitive to inadequate market information, the chances of violating an agreement and incomplete norms. The moderating effect of regional classification is supported in terms of purchase and sales expenses on the performance variance of peasant households, and in terms of inadequate market information on the performance variance of specialized cooperatives. Research limitations/implications – First, the data were collected at the county level, which could only reflect the conditions of the macro-environment. Second, many variables were designed as dummies for the sake of brevity and efficiency, because the respondents were officers in local agricultural departments. Third, transaction costs may not have a direct effect on the variance of productivity but indirect through many potential mediators. Practical implications – The results not only provide useful information for agricultural operators to analyze the transaction costs related to their forms of organization, but also impartial advice for policy makers to consider the form of agricultural operators in different regions. Originality/value – This study focusses on the role of the external environment by integrating the TCT and CT theory. Furthermore, it seeks to explore whether the relationship between transaction costs and the performance variance of peasant households and specialized cooperatives varies across different regions of China.

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Nikishina, Elena. "Cultural Capital as a Factor of Uncertainty and Transaction Costs." Moscow University Economics Bulletin 2015, no. 5 (October 30, 2015): 3–21. http://dx.doi.org/10.38050/01300105201551.

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The paper deals with the concept of culture and cultural capital in the economic theory. The concept of culture is analyzed through the points of criticism of social capital by R.Solow. The paper suggests a refined definition of culture and cultural capital. Several ways of productive use of cultural capital are described. Among them: through reduction of uncertainty and transaction costs, through use of competitive advantages, based on culture and harmonization of formal and informal rules. The effect of cultural capital on bilateral trade through reduction in uncertainty and transaction costs is tested in the empirical part of the paper. A suggested approach to cultural capital, based on transaction costs theory can be useful for institutional design, and policy-advice, aiming at the increase in competitiveness of society and the efficiency of formal institutions.

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Hess, Alan C. "Portfolio Theory, Transaction Costs, and the Demand for Time Deposits." Journal of Money, Credit and Banking 27, no. 4 (November 1995): 1015. http://dx.doi.org/10.2307/2077786.

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Ghosh, Soumen N. "The Economics of Transaction Costs: Theory, Methods and Applications (review)." Journal of Developing Areas 37, no. 1 (2003): 190–91. http://dx.doi.org/10.1353/jda.2004.0007.

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Giarratana, Marco S., and Juan Santaló. "Transaction Costs in Resource Redeployment for Multiniche Firms." Organization Science 31, no. 5 (September 2020): 1159–75. http://dx.doi.org/10.1287/orsc.2019.1351.

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Transaction costs strongly influence diversification dynamics, as predicted by resource theory. A mainstream view links the profitability of diversification with the existence of transaction costs that prevent a firm from trading in fungible, scale-free resources. This study applies a neo-Penrosian perspective to transaction costs, with the notion that diversification may be driven by the redeployment of non-scale-free resources. An empirical analysis, using tax changes in the drink sector as a measure of exogenous demand variation, offers results consistent with the prediction that redeployment is particularly relevant when retailing is concentrated and single-product competition within a focal product niche (e.g., beer) is fragmented. This study also measures redeployment across a portfolio of a multiniche firm when changes in its sales-growth rates for a particular product niche might imply contrasting changes in other product niches. The resulting evidence is consistent with predictions that demand uncertainty, and transaction costs create viable redeployment opportunities for multiniche companies.

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Journal articles on the topic 'Transaction costs theory'

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