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.

scholarly journals Corporate governance and transaction cost economics: A study of the equity governance structure

2016 ◽  
Vol 12 (1) ◽  
pp. 33-44 ◽  
Author(s):  
Jimmy A. Saravia Matus ◽  
Silvia Saravia-Matus
Keyword(s):  
Corporate Governance ◽  
Firm Performance ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Firm Valuation ◽  
Managerial Discretion ◽  
Full Analysis ◽  
First Time

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.

Trust conditional on governance structure: theory and evidence from case studies

2008 ◽  
Vol 8 (1) ◽  
pp. 33-46 ◽  
Author(s):  
Melanie Fritz ◽  
Gaetano Martino ◽  
Giulio Surci
Keyword(s):  
Case Studies ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Relationship Management ◽  
Governance Structure ◽  
Theoretical Background ◽  
Structure Theory ◽  
Supplier Relationship Management ◽  
Trust Theory ◽  
And Control

The paper proposes the idea that trust-based relationships can be established within the specific governance structures chosen by the agents. The theoretical background of this paper spans the literature from transaction cost and contract theory to supplier relationship management and trust theory. First communication and experience, risk perception attitude and the trade-off between trust and control are discussed within the analysis of trust source factors. Then these elements are considered in the light of Transaction Cost Economics. Three case studies are then presented in order to corroborate the theoretical proposition.

Government Control, Transaction Costs and Commitment Between the Hong Kong and Shanghai Banking Corporation (HSBC) and the Chinese Government

2008 ◽  
Vol 9 (1) ◽  
pp. 44-69 ◽  
Author(s):  
Qing Lu
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Foreign Bank ◽  
Chinese Government ◽  
Government Control ◽  
Local Authorities ◽  
Mutual Dependency ◽  
The Government

We use the tools of transaction cost politics (TCP) developed from transaction cost economics and economic analysis, to analyze the business relationship building between the Hongkong and Shanghai Banking Corporation (HSBC), the largest and most successful foreign bank in China, and the Chinese government between 1949 and 1978. We demonstrate the value of the TCP-based approach to evaluating the specialized governance structure of commitment built on mutual dependency. In particular, we identify several transaction attributes that give rise to hazards: transaction uncertainty, the role of the government in the economy, and the strength of the supporting coalition. Our analysis also confirms that commitment built on the mutual dependency between the international company and the local authorities and between the international company's home country authorities and the local authorities did reduce the company's transaction costs by guarding against the local authorities' opportunism.

scholarly journals Governance structure and transaction cost: relationship between strategy and asset specificity

Nova Economia ◽  
2007 ◽  
Vol 17 (3) ◽  
pp. 443-468 ◽  
Author(s):  
Christian Luiz da Silva ◽  
Maria Sylvia M. Saes
Keyword(s):  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Governance Structure ◽  
Asset Specificity ◽  
Governance Structures ◽  
Theoretical Discussion ◽  
Production Chain ◽  
Cost Approach ◽  
Determining Factors

This article presents a theoretical discussion of the determining factors of governance structures, using the transaction cost approach. The coexistence of distinct structures in the same production chain, whose assets show no difference in terms of specificity, is a problematic challenge for transaction cost economics, since it predicts a convergence towards the most efficient structures. The research is pure and explanatory and seeks to identify the determining or contributing variables to the occurrence of the phenomena. Thus, the research source is documental, encompassing the literature discussing the relation between governance structure and transaction cost.

Governing Farmland Conversion for Urban Development from the Perspective of Transaction Cost Economics

Urban Studies ◽  
2011 ◽  
Vol 49 (10) ◽  
pp. 2265-2283 ◽  
Author(s):  
Rong Tan ◽  
Volker Beckmann ◽  
Futian Qu ◽  
Cifang Wu
Keyword(s):  
Urban Development ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Quantitative Model ◽  
Process Efficiency ◽  
Governance Structures ◽  
Farmland Conversion ◽  
And Performance

This paper considers farmland conversion for the purpose of urban development as a series of transactions and discusses the determinants of appropriate governance structures for governing farmland conversion in terms of process efficiency. Towards this end, the paper develops a theoretical framework for analysing the process of farmland conversion based on transaction cost economics. The framework covers transactions, transaction attributes, governance structures and performance with the aim of minimising transaction costs. The paper also demonstrates the usability of the framework by creating a corresponding quantitative model for a case study in China. Furthermore, it identifies factors that influence the transaction costs associated with farmland conversion in China and explains why the related governance structures are chosen.

scholarly journals Analysis of the community supported agriculture model in Brazil from the point of view of the transaction cost economic

2021 ◽  
Vol 11 ◽  
pp. 48-70
Author(s):  
Liliane Ubeda Morandi Rotoli ◽  
Andréa Rossi Scalco ◽  
Giuliana Aparecida Santini Pigatto
Keyword(s):  
Transaction Costs ◽  
Transaction Cost ◽  
Transaction Cost Economics ◽  
Institutional Environment ◽  
Governance Structure ◽  
Sao Paulo ◽  
The State ◽  
Community Supported Agriculture ◽  
São Paulo ◽  
Transaction Cost Economic

The marketing relationship between farmers and consumers generates transaction costs, and these costs can be minimized through use of an appropriate governance structure. The main objective of this paper was to analyze the governance structure of Community Supported Agriculture in the State of São Paulo, Brazil, in order to identify whether it favors coordination between agents and promotes the reduction of transaction costs. The investigation followed a qualitative-quantitative approach according to the survey research method. For this, it was described the characteristics of the institutional environment in order to understand the aspects that delimit the behavior of the agents and that influence the structure of governance between the agents, as well as identifying the characteristics of transactions and agents (farmers and consumers), from the viewpoint of Transaction Cost Economics.  The analysis of the characteristics of the agents showed that there is limited rationality in the perception of consumers; the characteristics of the transactions indicated a high level of locational, temporal, physical and brand specificity, in addition to the technological specificity in the farmers' perceptions; and the frequency of transactions is high. The assessed scenario shows that the specified governance structure is the hybrid - with the bilateral dependence between autonomous actors and, although adequate, requires improvements in reducing uncertainty among agents. This article brings scientific contributions by relating the theoretical approach of Transaction Cost Economics to the short channels of food production and consumption and, mainly, in the state of São Paulo, Brazil, where these channels have grown in the last decade. Keywords: Commercialization channel. Institutional environment. Governance structure.

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.

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.

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.

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