Diffusion Model of Transactional Cost Dynamics

Abstract:     
The aim of this investigation is the elaboration of the economical institutions evolution model on the base of the mathematical formalization of diffusion processes and received author’s empirical results. The solution of the model caused to the following non simple conclusions. Firstly, the time and functional distribution of transactional cost is describes by the wave (sine curve in mathematical language) dependence. Secondly, the value of transactional costs is decreasing in case of absence of internal influence. The both conclusions may be explained by the introduction of hypothesis about the presence of economical institution life time, and as consequence the opening of transactional costs sine curve.

Number of Pages in PDF File: 8

Keywords: diffusion model, transactional cost, institutional evolution

JEL Classification: D21

Accepted Paper Series