Transaction Costs, Information Technology and Development

30 Pages Posted: 21 Nov 2004

See all articles by Nirvikar Singh

Nirvikar Singh

University of California, Santa Cruz

Date Written: October 2004

Abstract

This paper explores potential channels through which information technology (IT) affects economic development. The channel emphasized here is the reduction of transaction costs through the use of information technology. We discuss the nature of transaction costs, their possible impacts on economic outcomes, and the impacts of IT on transaction costs. We provide a theoretical discussion of how a reduction in transaction costs may affect the number of intermediate goods that are produced, and in turn how that number may affect the development path of the economy. We then draw on our fieldwork in rural India that examined the economics of rural Internet kiosks, and relate this multifaceted case study to the theoretical discussion of transaction costs. We conclude with a broader discussion of the potential impact of IT on developing economies.

Keywords: Transaction costs, information technology, Internet, development, India

JEL Classification: O12, O3, L31, P2

Suggested Citation

Singh, Nirvikar, Transaction Costs, Information Technology and Development (October 2004). Available at SSRN: https://ssrn.com/abstract=620724 or http://dx.doi.org/10.2139/ssrn.620724

Nirvikar Singh (Contact Author)

University of California, Santa Cruz ( email )

Department of Economics
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Santa Cruz, CA 95064
United States
831-459-4093 (Phone)
831-459-5077 (Fax)

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