Academic journal article Asian Social Science

Literatures Review on Transaction Costs Measurement Advances

Academic journal article Asian Social Science

Literatures Review on Transaction Costs Measurement Advances

Article excerpt

Abstract

Theory of transaction costs and its measurement has been regarded as the focus since its being put forward by scholars. Additionally, researches on the measurement are relatively less in China. This paper devotes to reviewing and analyzing present advanced methodologies of transaction costs measurement. And it summarizes the difficulties of measurement based on the concept of transaction costs. Furthermore, it presents three difficulties of measuring. They are unclear definition of transaction costs, unobservable costs in non-market and the unable replacement of opportunity costs. It concludes the measuring methods both on the macro and micro aspects. On macro aspect, it introduces methods as direct measuring, model-built measuring and margin analysis measuring. On micro aspect, it introduces methods as buy-sale price margin, typical reference quantities method, investigating method and data statistics method.

Keywords: transaction costs, measurement, reviews

(ProQuest: ... denotes formulae omitted.)

1. Introduction

Transaction costs has been important for modern economics, especially significant for studying institution system and social structure transformation, since Ronald H. Coase (1937) proposed it. Transaction costs affects economics system operation radically, for example, they effects what should be produced and what kind of exchanges would happen in the market; they effects what organization could exist and what kind of game rule could continue (Alexandra Behnam & Lee Behnam, 2003). "Transaction costs"- the costs of making exchanges-has become more important in explaining the structure of market and nonmarket forms of economic organization (Coase 1937, 1960; Wallis & North, 1986).

On macro aspect, transaction costs which widely exist have become a key indicator for studying economics system operation. It is a major factor for reducing costs and improving performance. The whole institution economics will be more believable if the transaction costs could be measured. The transformation from the state-planned economy to market-oriented economy can't be accomplished in an action, but can be evaluated step by step. At present, the phenomenon of both economics system-planned and market-oriented coexistence will persist in long period in China. During the metabolism progress of institutions transformations, transaction costs, the core of new institution economics seems to be particularly important. It is an unavoidable topic when studying social structure reform and institution evolution. On the micro aspect, transaction behaviors which can increase transaction costs, such as opportunism behavior, exist among enterprises and economic activities widely. An appropriate governing method is aimed at reducing the costs caused by transaction behaviors. In order to examining an effective method of governing transaction behaviors, the quantity of transaction costs should be estimated. So studying measuring methods of transaction costs is necessary.

So far various measuring methods have been applied by scholars, but there is few consolidated studying for the measuring methods. This literature review attempts to introducing some significant measuring methods for further study reference.

2. Transaction & Transaction Costs

2.1 Definition of Transaction

Scholars have different ideas about the definition of transaction in different periods. For example, John R. Commons (1931) came up with a generalized concept about transaction before Coase's literature "The Nature of the Firm" has been published. According to Commons, transactions are just the transfer and obtain of object future ownership between two persons, and the substance of transaction is the ownership transfer, not the object itself moves from one to another. A transaction occurs when a good or a service is transferred across a technologically separable interface. One stage of activity terminates and another begins (Oliver E. …

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