Smart Contracts and Transaction Costs
15 Pages Posted: 16 Nov 2018
Date Written: September 25, 2018
Because of the enforcement based on the blockchain technology, smart contracts are supposed to allow contracting parties to conduct transactions more efficiently than traditional contracts. This paper challenges that claim. Because of the need for an efficiency-enhancing adaptation of institutions -- a chief problem of transaction cost economics -- traditional contracts may incur lower transaction costs than smart contracts.
Keywords: Blockchain, smart contracts, incomplete contracts, transaction costs, adaptation
JEL Classification: D23, D86, L14, L86, O33
Suggested Citation: Suggested Citation