THEORETICAL DIFFICULTIES WITH TRANSACTION COST MEASUREMENT

Douglas W. Allen ()
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Douglas W. Allen: Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, B.C., V5A 1S6, Canada

Division of Labor & Transaction Costs (DLTC), 2006, vol. 02, issue 01, 1-14

Abstract: The transaction cost literature continues to mature as improvements have been made on both theoretical and empirical fronts. Over the past several years, serious attempts have been made to actually measure transaction costs. Here I argue that successful measurement must solve three methodological problems: the fundamental problem of monitoring, the problem of the next best, and the insufficiency of price spreads. I argue that the key to working through these problems is to have the proper theoretical definition of transaction costs couched within a model that accounts for the institutional details in question.

Keywords: Transaction costs; property rights; measurement (search for similar items in EconPapers)
JEL-codes: C62 D E1 F F11 F12 F16 J2 J3 L O (search for similar items in EconPapers)
Date: 2006
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Citations: View citations in EconPapers (3)

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DOI: 10.1142/S0219871106000251

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