Institutional Economics at the Micro Level?
Journal of Economic Issues, Vol. 33, No. 2, pp. 265-75, June 1999
11 Pages Posted: 30 Mar 2006
As Transaction Cost Economics evolved and entwined with the name of Oliver Williamson, it has absorbed a tension 'between an intuitive commitment to realism...and his commitment to some core presumptions of mainstream economics' [Hodgson 1998]. Most TCE scholars seem to rely on the latter commitment, and this could mean losing a chance of enriching economics in its methodological and theoretical foundations. This paper regroups and comments criticisms from 'Original' Institutional Economics (OIE) to TCE in the spirit of building bridges on: i) discrepancies among TCE's and Commons' concepts of transaction; ii) TCE's use of efficiency as a status quo rationalization; iii) the static analysis that ignores institutional feed-backs; iv) the assumption of opportunism; and v) the incompatibility of bounded rationality and optimizing behavior.
Keywords: Transaction cost economics, institutional economics, Oliver Williamson, new institutional economics, institutionalism, transaction costs, theories of the firm, economic organisation
JEL Classification: B19
Suggested Citation: Suggested Citation