Transaction cost

Transaction costs are those costs associated with the use of the market (market transaction costs), consisting in connection with the transaction of property rights (eg, purchase, sale, rent), or an internal hierarchy arise ( managerial transaction costs). The transaction cost theory states that for every transaction and transaction costs. The transaction cost theory is an integral part of the New Institutional Economics.

The amount of transaction costs may prevent the occurrence of transactions, such as when the initial information costs for a potential buyer get so high that the transaction is more expensive prohibitive. Also prevents the existence of transaction costs that buyers or sellers find the best offer for them, as rising with the search transaction costs outweigh any possible benefit from additional services again ( doctrine of diminishing marginal returns ).

Transaction costs are seen by Ronald Coase as market cost of use. This perspective differs from that of Oliver E. Williamson, according to which the costs arise from the bounded rationality of the actors in combination with opportunism, complexity of the environment and specificity of the investments. Even in the development of economic studies of Douglass North make transaction costs from a central block. In analyzing the development and prosperity of nations, however, North considered those costs incurred at the institutional level in the creation of markets. These costs are fundamentally different from transaction costs, the Coase discussed as market cost of use. North's transaction costs are market creation costs, ie in the classical sense meta- transaction costs.

The cost of a transaction depend on the form in which coordination (see Institutional Economics ) the transaction takes place. Depending on the level of transaction costs of goods exchange is therefore horizontal ( market- based) or vertically (within a company) instead. The basic principle: Formulation economic issues as a contract problem.

Typology of transaction costs

Ex ante ( before the transaction is executed)

• Origination costs (eg contact )
• Information gathering costs (eg search for information about potential transaction partners )
• Agreement costs (eg, negotiations, contract formulation, agreement )

Ex post ( after the transaction has been executed )

• Processing costs (eg, brokerage fees, transportation costs)
• Modification costs / adjustment costs (eg deadline, quality, quantity and price changes)
• Control costs (eg compliance deadline, quality, quantity, price and non-disclosure agreements, acceptance of delivery )

More specifically, is meant by transaction cost search, when initiating, information, attribution, negotiation, decision, agreement, settlement, hedging, enforcement, inspection, adjustment and termination costs.

Transaction costs arise, for example, when occurring between the people involved in a transaction communication needs, communication problems, misunderstandings and conflicts.

Lower transaction costs does not fall of the price of the good, provided that the pure production costs are concerned. The example of the transport costs, however, it is clear that no definite opinion with regard to the delimitation of the production costs of the transaction costs is. If the transport is interpreted as part of the transformation process, it is more likely attributable to the cost of production. If the transport (infra ) structure, however, saw himself as a customizable man-made institution, this would argue in turn for it to interpret the transport costs as part of the transaction costs.

Factors of transaction costs are:

• Frequency of transaction
• Specificity of the transaction (location specificity, investment specificity, human asset specificity, buyers specificity)
• Strategic importance
• Transaction atmosphere
• Uncertainty of the transaction

History of Ideas

For its transaction cost approach, including the essay, " The Nature of the Firm " in 1937, received the American economist Ronald Coase the 1991 Nobel Prize in Economics.

Oliver E. Williamson was awarded in 2009 (along with Elinor Ostrom ) the Nobel Prize in Economics for his transaction cost theoretical considerations. His approach shows how the functioning of markets and hierarchical structures can be examined for their efficiency (eg in companies).