Transaction Cost, Institutions, and Evolution

Karl Wärneryd

No 13, SSE/EFI Working Paper Series in Economics and Finance from Stockholm School of Economics

Abstract: We suggest an operational definition of transaction cost as the expected value of strategy information in games played by individuals randomly matched from a large population. We relate the concept of a transaction cost minimum to those of Nash equilibrium, efficiency, and evolutionary stability, and apply it in a simple model of the Coasean firm. In particular, we identify circumstances in which evolutionary dynamics will minimize transaction cost, which allows various informal hypotheses about the relation between institutional evolution and transaction cost to be addressed in a precise sense.

Keywords: Transaction costs; evolutionary game theory; social institutions (search for similar items in EconPapers)
JEL-codes: C72 D23 D61 D81 (search for similar items in EconPapers)
Pages: 22 pages
Date: 1994-04
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Citations: View citations in EconPapers (3)

Published in Journal of Economic Behavior and Organization, 1994, pages 219-239

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Persistent link: https://EconPapers.repec.org/RePEc:hhs:hastef:0013

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