scholarly journals Vertical Governance between Airlines and Airports - A Transaction Cost Analysis

2006 ◽  
Vol 5 (4) ◽  
Author(s):  
Johannes Fuhr ◽  
Thorsten Beckers

With airport privatization and infrastructure expansion projects taking place in the liberalized European air transport market, airport and airline companies are critically reevaluating their vertical governance structures. This paper analyzes the comparative efficiency of vertical governance structures in the airport-airline supply relationship. Using transaction cost economics as the lens of analysis, we develop propositions and present supporting qualitative case studies. Our propositions state that hub airlines and hub airports seek specialized governance structures, while value-based carriers and base airports enter into long-term contracts supported by complementary safeguards. These privately crafted governance modes complement or even replace external regulation.

2004 ◽  
Vol 6 (3) ◽  
pp. 1-20 ◽  
Author(s):  
Magali Delmas ◽  
Alfred Marcus

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.


Author(s):  
Andrew B. Whitford

This chapter comments on Oliver Williamson’s 1975 book,Markets and Hierarchies: Analysis and Antitrust Implications, a critical analysis of how firms operate in markets. Williamson describes a new way of understanding markets and hierarchies by using the term “New Institutional Economics” for the first time. This chapter examines Williamson’s approach and the impact of his book, first by discussing his arguments about markets and hierarchies in relation to what policy analysts sometimes call “the politics of ideas”. It then considers Williamson’s particular interest in antitrust policy as well as his thesis about transaction cost economics. Finally, it evaluates the implications of Williamson’s research for the long-term development of a politics of ideas about firms in markets.


2012 ◽  
Vol 27 (1) ◽  
pp. 23-40
Author(s):  
Ryu See Un

This study focuses on changes in transaction costs over time in nonmarket settings. Traditional Williamsonian transaction cost economics theory shows little concern with time. However, this study reveals that time is a crucial factor in the fluctuation of transaction costs in nonmarket settings: Transaction costs increase in the initial and middle phases of a transaction. But in the long term, they may increase or decrease and are affected considerably by whether the rules, procedures, and protocols governing the transaction are effective ("green tape") or ineffective ("red tape"). In contrast, traditional transaction cost economics assumes a gradual decrease in transaction costs over time. The passage of time and the "red tape" or "green tape" governing the transaction influence stakeholders` transaction behavior in nonmarket settings.


Author(s):  
Barak Richman

This chapter assesses New Institutional Economics (NIE). It begins by describing the author’s own understanding of the New Private Law (NPL). The chapter then provides a brief introduction to NIE and its intersection with the study of legal doctrines and institutions. NIE’s roots extend—at least—to Ronald Coase’s famous 1937 article, “The Nature of the Firm,” and more likely to the writings of nineteenth- and early twentieth-century political economists. These intellectual traditions have shaped what is now known as NIE into two distinct branches. The first branch examines institutions as “humanly designed constraints that structure political, social, and economic interactions.” The second branch of NIE focuses on more micro-level behavior. Called “the governance branch” and operationalized by transaction cost economics, the foundational idea is to describe firms not in neoclassical terms as production functions, but in organizational terms as governance structures. The chapter explains how both NPL and NIE exhibit the hallmarks of interdisciplinary, scholarly pluralism, and an inquisitive focus on real-world, tractable problems. It concludes with some thoughts about the future of NPL and, in particular, the lessons it can take from NIE’s successes.


2022 ◽  
Vol 60 (1) ◽  
Author(s):  
Jaiane Aparecida Pereira ◽  
Amanda Ferreira Guimarães ◽  
Rejane Heloise dos Santos ◽  
Sandra Mara de Alencar Schiavi ◽  
José Paulo de Souza

Abstract: This study sought to discuss the governance structures adopted between livestock producers and their cooperative slaughterhouses in the chain of differentiated beef in the state of Paraná. The theoretical basis used was the Transaction Cost Economics and Measurement Costs Economics, complemented by the specificities of cooperatives. We conducted interviews with three key agents and eleven representatives of six cooperative slaughterhouses operating in this system. As result, we observed that the cooperatives have similar objectives and requirements, although there are differences in the levels of formality or flexibility. Although transactions are recurrent and have been successful, they involve a high asset specificity, depend on subjective measurements, and are still exposed to market uncertainties, which leaves room for the generation of conflicts and disincentives to quality. Despite this, the relational and reputational aspects associated with trust and partnership between the parties are elements that enable reduced transaction and measurement costs in these structures. At first, the measurements conducted by the cooperatives had an important role in the construction of trust between the parties and for value distribution. In a second moment, the trust built enabled the reduction of measurement costs.


2019 ◽  
Vol 11 (4) ◽  
pp. 1095 ◽  
Author(s):  
Laura A. Carlson ◽  
Vera Bitsch

In response to consumer concerns about sustainability of food production and distribution systems, and the difficulties many agricultural producers face to self-sustain while providing the quality of products consumers desire, alternatives to market-based exchange are developing. Solidarity-based food systems (SFS) based on relationships of mutual trust, dependency and support between consumers and producers are an example. SFS are designed to insulate producers from market pressures and alleviate consumers’ mistrust in market-based mechanisms. A network of SFS has formed in Germany under the name Solidarische Landwirtschaft (Solawi). Theories based on economic principles that help explain the way alternatives to market-based transactions in agriculture are organized are still lacking. The article suggests Transaction Cost Economics (TCE) as helpful to gain a better understanding of how these organizations form and function. The governance structures Solawis create are considered hybrid organizations according to TCE. Qualitative research methods are used to generate detailed accounts of the governance structures of four Solawis and the reasons behind the decisions of individual actors to participate. Effectiveness of TCE in evaluating these structures is analyzed. Based on the results, the concept of transaction benefits is suggested as a potential augmentation of TCE to improve its applicability to SFS.


2015 ◽  
Vol 8 (2) ◽  
pp. 173 ◽  
Author(s):  
Cleiciele Albuquerque Augusto ◽  
José Paulo De Souza

The transaction cost economics (TCE), in the field of New Institutional Economics, have been shown as one of the most elaborate theoretical and explanatory constructs of arrangements existing in organizational reality. However, recent studies have sought on the Resource Based View (RBV) approach the theoretical foundations about setting these arrangements, in addition to highlighting a required complementarity between TCE and the RVB in understanding how they are formed. In this sense, the objective in this article was to understand how the complementarity theory TCE and RBV explain the configuration of the governance structures in the context of New Institutional Economics. The discussion presented in the form of essay, demonstrated that resources and differentiated capabilities could provide the basis for the proper choice of governance structures. These structures, in turn, are chosen in order to protect and achieve sustainable competitive advantages from these resources. Thus, that the complementary view of TCE with RBV is able to encompass more fully the aspects related to the choice of firm boundaries, minimizing the individual limitations of these approaches in terms of strategic analysis.


2017 ◽  
Vol 20 (4) ◽  
pp. 511-532 ◽  
Author(s):  
Franco M. Martins ◽  
Jacques Trienekens ◽  
Onno Omta

This paper depicts the main coordination mechanisms (CMs) included in governance structures used to support the supply of piglets in the Brazilian Pork Chain (BPC). Furthermore, it analyses how and why actors use plural forms of coordination to support similar transactions. Based on the literature and an exploratory study carried out in the BPC, we propose a framework to analyse how price, volume, quality and resource allocation are coordinated in a transaction. This paper builds on transaction cost economics in two ways. First, it shows that to arrange a transaction, a buyer may set CMs in distinct positions within the market-hierarchy continuum. Second, it shows that actors use plural CMs with different counterparties in similar transactions. We found four explanations for plural governance: market fluctuations, bargaining power of suppliers, stricter coordination and quality, and the exchange context.


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