Transaction Cost Economics as a Three Dimensional Externally Driven Research Program
Economic Studies, Nos. 1-2, pp. 7-31, 2006
27 Pages Posted: 11 Nov 2006
Transaction cost economics (TCE) is a multidimensional research program which takes its origin from contributions made by Hicks (1935), Coase (1937), Alchian and Demsetz (1972). Therefore, TCE can be divided into three complementary domains: exchange branch, governance branch and measurement branch. The first one deals with the costs of making transactions (e.g., broker's fee). The second one focuses on the impact of transactions' characteristics on the mode of governing them. The last one is twofold. First, it is concerned with measuring inputs productivity and assuring a close correspondence between inputs and rewards in team production. Second, it deals with the costs of measuring attributes of the good and their impact on the choice of contractual form. It is argued that the development of TCE can be understood as the continuous process of the operationalization of the ideas developed by the above-mentioned authors. Furthermore, it is shown that TCE is an externally driven research program, namely that is driven by observed facts. The reflection on the research perspectives of TCE finishes the article.
Keywords: transaction cost economics, history of economics, industrial organization, institutions, economic methodology, market structure
JEL Classification: B13, B20, B41, D23, L22
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