Institutional Economics at the Micro Level? What Transaction Costs Theory Could Listen From Original Institutionalism (In the Spirit of Building Bridges)

Huascar Pessali () and Ramon Fernandez

Industrial Organization from University Library of Munich, Germany

Abstract: Inertia in academia sometimes obstructs the development of important insights. That is one reason for the specially long gap separating Coase's seminal paper [1937] that laid the foundations of current Transaction Cost Economics (TCE) and the efforts of scholars to develop his ideas. But as TCE evolved and merged 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 (search for similar items in EconPapers)
JEL-codes: L (search for similar items in EconPapers)
Pages: 11 pages
Date: 2005-11-14
New Economics Papers: this item is included in nep-his, nep-hpe and nep-pke
Note: Type of Document - pdf; pages: 11
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Persistent link: https://EconPapers.repec.org/RePEc:wpa:wuwpio:0511006

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