On a Fallacy in the Coase Theorem and the Theorem of Transaction Costs Substitution

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Steven N. S. Cheung
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Coase Theorem ◽  
Economic Institutions ◽  
General Version ◽  
Historical Account ◽  
Rent Dissipation

AbstractThis paper first presents a historical account of the origin of the Coase Theorem. It then elaborates its significance in explaining the working of economic institutions. After expounding the concepts of transaction cost and rent dissipation, it points out an error in the Coase Theorem. Lastly, the paper propounds the Theorem of Transaction Costs Substitution as an extended and general version of the Coase Theorem.

From transaction costs to transaction value: Overcoming the frictional paradigm

2020 ◽  
pp. 51-81
Author(s):  
D. P. Frolov
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Path Dependence ◽  
Transaction Cost Economics ◽  
Cost Minimization ◽  
Low Cost ◽  
Coase Theorem ◽  
Transactional Analysis ◽  
Transaction Sector ◽  
Transaction Value

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.

A Coasian perspective on informal rights assignment among waste pickers in the Philippines

Urban Studies ◽  
2016 ◽  
Vol 54 (13) ◽  
pp. 3071-3084 ◽  
Author(s):  
Mark Hansley Chua
Keyword(s):  
Open Access ◽  
Transaction Costs ◽  
The Philippines ◽  
Coase Theorem ◽  
Government Assistance ◽  
Rent Dissipation ◽  
Waste Pickers

This paper examines in light of the Coase Theorem how delineation of a degree of enforceable rights for a previously open-access dumpsite in the Philippines would affect market transactions of waste pickers. It shows that a simplistic exclusion solution was not enough to constrain rent dissipation of recyclables in the primeval land fill. Some intervention of non-government organisations backed by some initial government assistance were found helpful in reducing transaction costs to sustain operations and promote innovations and initiatives from the scavengers themselves despite obvious external economic difficulties.

scholarly journals Firms' Choice of Regulatory Instruments to Reduce Pollution: A Transaction Cost Approach

2004 ◽  
Vol 6 (3) ◽  
pp. 1-20 ◽  
Author(s):  
Magali Delmas ◽  
Alfred Marcus
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Command And Control ◽  
Governance Structure ◽  
Governance Structures ◽  
Negotiated Agreements ◽  
Regulatory Instruments ◽  
Market Opportunities ◽  
And Control

This paper compares the economic efficiency of firm-agency governance structures for pollution reduction using transaction costs economics. Two governance structures are analyzed with the transaction costs approach: command and control regulation (CCR) and negotiated agreements (NAs). We propose that the choice of governance structure depends on the strategies firms pursue given the attributes of their transactions and their market opportunities. The application of transaction cost economics analysis leads to different choices of regulatory instruments. Firms in more mature, stable industries are likely to choose command and control, while firms in new, dynamic sectors are more likely to opt for negotiated agreements. Frequency of transactions is a key factor in firm choice.

Broaden the Pathway to Inclusive Entrepreneurship: A Transaction Cost Proposition

2021 ◽  
Vol 0 (0) ◽  
Author(s):  
Jian Du ◽  
Jie Lu ◽  
Yanbing Jiang
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Social Exclusion ◽  
Transaction Cost Economics ◽  
Inclusive Growth ◽  
Stage Model ◽  
Base Of The Pyramid ◽  
Resource Base ◽  
Personal Competence

Abstract Since entrepreneurship was conceptualised as a panacea for achieving inclusive growth in the “base of the pyramid” (BoP) regions, various ways have been explored to leverage this powerful tool, such as helping potential entrepreneurs build the resource base and capabilities. However, given the severe resources constraints in the BoP regions, such a goal is difficult to achieve. Besides, due to the high demands on personal competence, only a few people can benefit from this method, which fails to solve the problem of social exclusion in the BoP regions. Therefore, we aim to find a better way to leverage entrepreneurship to tackle the problem of the BoP regions by calling for more attention to the inclusiveness of entrepreneurship. Based on data of inclusive entrepreneurs in Zhejiang, China, we construct a three-stage model for inclusive entrepreneurship. We also apply Transaction Cost Economics to look for determinants that foster inclusive entrepreneurship and validate our main assertion that decreasing transaction cost significantly helps to increase the inclusiveness of entrepreneurship, and different phases of inclusive entrepreneurship (i.e., opportunity inclusiveness, participation inclusiveness, and sharing inclusiveness) are influenced by different sets of determinants of transaction costs.

scholarly journals IDENTIFICATION OF TRANSACTION COST MANAGEMENT FUNCTIONS

2021 ◽  
Vol 1 (49) ◽  
Author(s):  
Sergiy Bardash ◽  
Tatiana Osadcha
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Financial Stability ◽  
Cost Management ◽  
Economic Benefits ◽  
Information Support ◽  
Control Analysis ◽  
Accounting System ◽  
Management Process ◽  
Management Functions

The basis of information support in the field of economic relations is an accounting system adequate to modern needs. However, such an accounting system as the basis of information support and accounting as one of the functions of management does not create sufficient prerequisites to ensure the effectiveness of the management process, including transaction cost management. Motivation in the process of managing transaction costs involves the use of moral and material incentives for employees of the entity, namely monetary rewards, recognition of achievements, promotion, providing conditions for the manifestation of creative potential in order to prevent deviant behaviour, the consequences of which are the search for economic benefits from the resources of the business units. In addition, the function of motivation should extend to the business partners of the entity and consider their interests, goals and business reputation. The indicated information should form sufficient grounds for the motivational component of business negotiations and create conditions for obtaining the desired result. Effective transaction cost management is a prerequisite for the competitiveness of products, goods, works, services, and the business unit that produces, sells and aims to ensure a lasting plateau of financial stability. This dependence exists since transaction costs both create conditions for further growth of profits generated by the entity and can reduce it under opportunistic behaviour. Optimization of transaction costs can be achieved not only through their accounting, control, analysis, but also the performance of other management functions, the list of which, as evidenced by the study of recent publications, is not definitively defined. This paper proves that transaction cost management is a mandatory component of the dynamic management process of the entity, which should be harmonized with the overall management process and meet its main goal – to achieve high economic performance

Transaction Costs and Information Systems: Does IT Add Up?

2006 ◽  
Vol 21 (3) ◽  
pp. 195-202 ◽  
Author(s):  
Antonio Cordelia
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Information And Communication Technology ◽  
Information Flow ◽  
Communication Technology ◽  
Flow Distribution ◽  
Transaction Cost Theory ◽  
Design And Implementation ◽  
Is Research ◽  
Information And Communication

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.

How A Social Enterprise Wanes: The Transaction Costs of Credible Commitments at Etsy.com

2021 ◽  
pp. 026010792110382
Author(s):  
Alejandro Agafonow ◽  
Marybel Perez
Keyword(s):  
Political Economy ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Social Enterprise ◽  
Economic Transition ◽  
Transaction Cost Economics ◽  
Credible Commitments ◽  
Social Mission ◽  
Corporate World ◽  
Online Marketplace

This article fathoms how a social enterprise wanes by applying the construct of imperative credible commitments from transaction cost economics to the case of Etsy.com, an online marketplace created to connect artisans and craftwork enthusiasts. In the absence of imperative credible commitments, Etsy’s social mission was bound to change, leaving the company’s major stakeholders without safeguards to protect the perpetuation of the transactions that Etsy was created to serve. The construct of credible commitments has proved to be fertile in understanding issues of political and economic transition, yet its relevance to puzzle out the corporate world has been underestimated. To bridge this gap, we have recourse to the analogy between disabling the discretion of monarchs and executives to prevent them from reneging on commitments. Hence, by building on political economy academics’ attention is drawn to strategies that, despite existing in the corporate world, have rarely been perceived as important by management and economics scholars.

KUALITAS PASAR OBLIGASI KORPORASI INDONESIA

2017 ◽  
pp. 11-25
Author(s):  
Donalson Silalahi
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Sampling Technique ◽  
Bond Market ◽  
Corporate Bond ◽  
Multiple Regression Equation ◽  
Bond Price ◽  
Corporate Bond Market ◽  
Macroeconomic Indicators

lndonesia corporate bond market development can he done from various aspects, among others, through the stability and improvement of macroeconomic indicators, improving the quality of financial infrastructure, and improving the quality of the corporate bond market. This study aimed to describe the quality Indonesian corporate bond market based transaction costs approach. Therefore, the quality of the corporate bond market in this study manifested by transaction costs and decomposition of transaction costs (information friction and real friction). Based on the estimation of transaction costs and decomposition of transaction costs, regulators and market managers can create a variety of policies to improve the quality of the corporate bond market. To achieve these goals, the data used were corporate bond registered and transacted in the bond market and the sources of data from Securities Division reported OTC-FIS (Over the counter – Fixed Income Service). The research samples were 2336 observations using the purposive sampling technique to gather samples. The data were analyzed using the multiple regression equation. The research indicates that: First, transaction costs ty’ corporate bond is 0-798 with t-statistic is 31.964. Second, the contribution of information friction againts transaction cost is 45.1 percent with t-statistic is 18.20. "third, the contriliution real friction againts transaction cost is 14.2 percent with t-statistic is 5.71. Fourth, the information friction have the greater contribution to transaction cost with or without the classification of sample. Fifth, in the change of bond price segmentation, the contribution of information friction increases with the increase of the change of bond price. With reference to the research results, the quality of the corporate bond market can he improved by lowering the transaction costs in trade mechanism. Transaction costs can be reduced through increased transparency and improved the trading niechanisni of corporate bond market. Furthermore, the result if this research can be used by investors in creating portfolios and holding periods and for bond emitters in issuing bonds.

Sign in / Sign up

Export Citation Format

Share Document