Economic Calculation and the Organization of Markets

22 Pages Posted: 10 May 2018 Last revised: 24 May 2018

See all articles by Ennio Emanuele Piano

Ennio Emanuele Piano

Middle Tennessee State University

Louis Rouanet

George Mason University

Date Written: April 16, 2018

Abstract

This paper contributes to the transaction cost literature and to Austrian institutional analysis by trying to reconcile the property right approach to transaction costs developed by Cheung, Barzel and Allen and the work of Ludwig von Mises and Hayek on economic calculation. We argue that the two approaches would gain from each other. In a world without transaction cost, there would be no calculation problem. Only when transaction costs are positive will the scope of economic calculation be limited. It follows that when transaction costs are positive, the capacity to use economic calculation works as a constraint on the organization of markets.

Keywords: Economic Calculation, Transaction Costs, Property Rights, Economic Organization, Theory of the Firm

JEL Classification: B53, D23, L22

Suggested Citation

Piano, Ennio Emanuele and Rouanet, Louis, Economic Calculation and the Organization of Markets (April 16, 2018). Available at SSRN: https://ssrn.com/abstract=3163548 or http://dx.doi.org/10.2139/ssrn.3163548

Ennio Emanuele Piano (Contact Author)

Middle Tennessee State University ( email )

Murfreesboro, TN
United States

Louis Rouanet

George Mason University ( email )

4400 University Drive
Fairfax, VA 22030
United States

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