Smart Contracts and Transaction Costs

15 Pages Posted: 16 Nov 2018

See all articles by Massimiliano Vatiero

Massimiliano Vatiero

Università della Svizzera italiana; University of Trento - Department of Economics and Management

Date Written: September 25, 2018

Abstract

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

Vatiero, Massimiliano, Smart Contracts and Transaction Costs (September 25, 2018). Available at SSRN: https://ssrn.com/abstract=3259958 or http://dx.doi.org/10.2139/ssrn.3259958

Massimiliano Vatiero (Contact Author)

Università della Svizzera italiana ( email )

Via Giuseppe Buffi 13
Lugano, Ticino 6900
Switzerland

University of Trento - Department of Economics and Management ( email )

Via Inama 5
Trento, I-38100
Italy

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