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Transaction Costs, Information Technology and Development

Nirvikar Singh

MPRA Paper from University Library of Munich, Germany

Abstract: This paper examines the impact of transaction costs on economic welfare and development. We extend the static model of Romer (1994), in which transaction costs reduce welfare by the reducing the equilibrium number of intermediate goods, and estimate the welfare losses in the case of domestic transaction costs. The main analysis of the paper extends a dynamic model of Ciccone and Matsuyama (1996) to incorporate transaction costs. We show that high transaction costs reduce the long-run level of development, and may arrest development completely in the extreme case. We also discuss the role of information technology in reducing transaction costs, and offer some preliminary evidence from rural India to illustrate how these reductions may occur through the use of such technologies.

Keywords: transaction costs; information technology; Internet; development; India (search for similar items in EconPapers)
JEL-codes: L31 O12 O3 P2 (search for similar items in EconPapers)
Date: 2008-06-10
New Economics Papers: this item is included in nep-cwa, nep-ict and nep-knm
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (7)

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Related works:
Journal Article: Transaction costs, information technology and development (2008) Downloads
Working Paper: Transaction Costs, Information Technology and Development (2004) Downloads
Working Paper: Transaction Costs, Information Technology and Development (2004) Downloads
Working Paper: Transaction Costs, Information Technology and Development (2004) Downloads
Working Paper: Transaction Costs, Information Technology and Development (2004) Downloads
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