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"This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions. The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public / private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting"--National Bureau of Economic Research web site

According to economic theory, there are no strong reasons to tax (or to subsidise) residential moves, although low levels of taxation may be potentially justified to deal with the presence of externalities and economic stability. This is in contrast to practise in most countries where governments have created strong barriers to moving (transaction taxes, rent control) which induces substantial transaction costs. Likely, the welfare losses due to these government-induced transaction costs are substantial.

According to economic theory, there are no strong reasons to tax (or to subsidise) residential moves, although low levels of taxation may be potentially justified to deal with the presence of externalities and economic stability. This is in contrast to practise in most countries where governments have created strong barriers to moving (transaction taxes, rent control) which induces substantial transaction costs. Likely, the welfare losses due to these government-induced transaction costs are substantial.

In this paper, the influence of interfirm trust relationships on the level of transaction costs of economic exchanges is analysed. In many cases, it is argued, trust appears to be either neutral in respect of transaction costs or even augmenting them. The lowering of transaction costs can be explained by virtue of different attendant institutions, like reputation or contract securities, rather than owing to trust per se. Mutual correlation between trust and transaction costs, including knowledge accumulation in interfirm alliances, property rights protection within joint innovation projects and social capital formation in business groups, is considered.

AbstractBehavioral scientists have begun to research 'sludge,' excessive frictions that make it harder for people to do what they want to do. Friction is also an important concept in transaction-cost economics. Nevertheless, sludge has been discussed without explicit referral to transaction costs. Several questions arise from this observation. Is the analogy to friction used differently in both literatures? If so, what are the key differences? If not, should we develop the concept of sludge when the well-established literature on transaction costs already exists? This conceptual article shows that sludge and transaction costs are related, but distinct, concepts, and that the literature on sludge can benefit from incorporating elements from transaction-cost research. For example, we suggest defining sludge as aspects of the choice architecture that lead to the experience of costs, organize sludges using a typology inspired by the transaction-cost literature, highlight specificity, uncertainty, and frequency as important determinants of the 'sludginess' of choice architecture, and show that sludge audits can be conducted using methods developed in the transaction-cost literature.

All three chapters of my dissertation belong to the general topic of transaction costs to export. In chapter 1 we explore empirically how export delays and export monetary costs relate over time. We find evidence that suggest that countries increase pecuniary exports costs to fund innovations that decrease export delay. This implies that international organisations' singular preoccupation with export delays (at the exclusion of export costs) has the potential to retard rather than facilitate the cause of globalisation. The study also shows how domestic delays and monetary costs to export affect the volume of trade, with special focus on developing countries. Our main findings suggest that export delays are not as significant for developing countries as previously thought, while pecuniary costs - largely neglected in the literature, have a significant negative effect on how much countries trade. Anecdotal evidence in the form of countries' self-declarations and the statistical evidence provided in Chapter 1 suggest that the monetary costs generated by governmental initiatives to reduce export delays are largely transferred to exporters. However, it is unclear why governments choose this course of action, given that increasing export pecuniary costs hinders trade. To shed relevant light, in the second chapter we provide one theoretical explanation. In our model the government objective is to maximise social welfare. We show that, by passing the costs of reductions in delays to exporting firms, governments generate market incentives that optimise economic efficiency. The third chapter complements chapters 1 and 2 by examining the impact of export time sensitivity across industries on the patterns of trade. My findings show evidence in support of the hypothesis that, in the last decades, the supply of exports in more time sensitive industries tended to agglomerate near the demand centre. The study also shows evidence of an increase in the share of time sensitive industries in total trade. These results may be explained by the recent introduction of new technologies, which have not only increased the demand for timeliness in trade but have also facilitated the international commercialisation of time sensitive products. The geographical agglomeration effect of time sensitivity coupled with the relative growth of trade in time sensitive industries may explain, at least in part, the fact that the average negative effect of distance on trade, in spite of recent improvements in transportation and communication technologies, has not declined, and may have even strengthened over time. Finally, my findings show that, independently of their geographical location, high-income countries not only tend to specialise in the production of time sensitive industries but also that this pattern of specialisation is consolidating over time.

This book is a study of the multinational corporation from the transaction cost perspective. The firm is a system of administrative relationships based on a nexus of contracts and the strong interdependence of specific assets. The firm substitutes the market mechanism when, in view of resource allocation and the existing transaction costs, it is a more costly instrument than the entrepreneur with his coordinating role. Using the theory advanced by Ronald Coase and Oliver Williamson we investigate some key features of the multinational corporation. We analyze the role of technology for the emergence of multinationals. This emergence is predetermined by scientific discoveries and technological innovations which shorten the geographic distances among economic resources in the world and allow cutting on organizational costs within the firm. The multinational firm is a complex hierarchical structure dispersed in many countries and aimed at replacing the international market in the allocation of global resources. The firm performs this task at less cost than the market. The more costly the different regional or national markets in which multinational firms operate, the greater the advantage of the bureaucracy, the more centralized the company and the lower the autonomy of the subsidiaries. Some further findings are that there are specific risks for multinationals in their operations in the global market since there are various market failures present. Firms overcome those by internal organization, horizontal and vertical integration. Through intrafirm trade and transfer prices companies manage to capture externalities becoming thus a cheaper instrument of resource allocation than the market. The international division of labor transforms into intrafirm division, market pricing turns into transfer prices and the technological transfer turns into intrafirm exchange of technological knowledge and innovations. Multinational firms are faced with transactional and behavioral opportunism in Eastern Europe, both from employees and contractual partners in market dealings. Multinationals have difficulty finding skillful management with western education and experience in the tradition and practices of the market economy. This hinders the role of management in substituting the market mechanism. Additional sources of risk and instability for multinational corporations in the region of Eastern Europe are the underdeveloped capital market, macroeconomic instability, consistent corruption and crime, political risks, lack of property right enforcement, etc.