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Oliver E. Williamson - One of the best experts on this subject based on the ideXlab platform.

  • The Transaction Cost Economics Project
    Montenegrin journal of economics, 2014
    Co-Authors: Oliver E. Williamson
    Abstract:

    My discussion of the Transaction Cost Economics Project is in three parts. Section 1 addresses the question, what is Transaction Cost Economics (TCE)? Section 2 deals with How did I get involved? Section 3 looks to the future.

  • Interdisciplinary Social Science: The Transaction Cost Economics Project
    Economics for the Curious, 2014
    Co-Authors: Oliver E. Williamson
    Abstract:

    Although many economists decided on Economics as a career choice when they were undergraduates, that was not my experience. I became an economist by discovering my interests as I progressively moved from engineering to business to Economics and, within Economics, finding that interdisciplinary Economics (which, for me, would initially entail combining Economics with organization theory and later would include aspects of contract law) was an underdeveloped but promising area of teaching and research. As events would have it, what became known as Transaction Cost Economics (TCE) would become one of the foundations upon which the New Institutional Economics is based.2

  • the Transaction Cost Economics project the theory and practice of the governance of contractual relations
    2013
    Co-Authors: Oliver E. Williamson
    Abstract:

    Contents: Acknowledgements Introduction Oliver Williamson PART I THEORY AND CONCEPTS 1. O.E. Williamson (2001), 'Hierarchies and Markets' 2. Oliver E. Williamson (1971), 'The Vertical Integration of Production: Market Failure Considerations' 3. Oliver E. Williamson (1979), 'Transaction-Cost Economics: The Governance of Contractual Relations' 4. Oliver E. Williamson (1983), 'Credible Commitments: Using Hostages to Support Exchange' 5. Oliver E. Williamson (1991), 'Comparative Economic Organization: The Analysis of Discrete Structural Alternatives' 6. Oliver E. Williamson (1985), 'The Limits of Firms: Incentive and Bureaucratic Features' 7. Oliver E. Williamson (1991), 'Strategizing, Economizing, and Economic Organization' PART II PUBLIC POLICY 8. Oliver E. Williamson (1976), 'Franchise Bidding for Natural Monopolies - in General and with Respect to CATV' 9. Oliver E. Williamson (2009), 'Opening the Black Box of Firm and Market Organization: Antitrust' 10. Oliver E. Williamson (1988), 'Corporate Finance and Corporate Governance' 11. Oliver E. Williamson (2008), 'Corporate Boards of Directors: In Principle and in Practice' PART III INTERDISCIPINARY SOCIAL SCIENCE 12. Oliver E. Williamson (1993), 'Transaction Cost Economics and Organization Theory' 13. Oliver E. Williamson (1993), 'Calculativeness, Trust, and Economic Organization' 14. Oliver E. Williamson (2005), 'Why Law, Economics, and Organization?' PART IV PERSPECTIVES 15. Oliver E. Williamson (2009), 'Pragmatic Methodology: A Sketch, with Applications to Transaction Cost Economics' 16. Oliver E. Williamson (2010), 'Transaction Cost Economics: The Natural Progression'

  • The Transaction Cost Economics Project
    2013
    Co-Authors: Oliver E. Williamson
    Abstract:

    Transaction Cost Economics has and continues to be a fruitful area of research. There is still much to be done in the field with past research being used in conjunction with the vast number of contractual phenomena that have yet to be investigated in Transaction Cost Economics terms. New challenges are posed by the need to move beyond the design of new contractual instruments (such as financial derivatives) to include an examination of the lurking hazards that attend contract implementation.

  • Transaction Cost Economics the natural progression
    The American Economic Review, 2010
    Co-Authors: Oliver E. Williamson
    Abstract:

    This manuscript provides the Nobel laureate's reflections on Transaction Cost Economics. The overview section frames governance as the overarching concept and Transaction Cost Economics as the means by which to breathe operational content into governance and organization. The vertical integration section identifies efficiency factors associated with determining when a firm produces a good or service to its own needs rather than outsource. A discussion of the rudiments of Transaction Cost analysis is subsequently provided. Puzzles and challenges that require pushing the logic of efficient governance to completion are examined and followed by concluding remarks.

Herbert J. Hovenkamp - One of the best experts on this subject based on the ideXlab platform.

  • antitrust and the close look Transaction Cost Economics in competition policy
    Social Science Research Network, 2014
    Co-Authors: Herbert J. Hovenkamp
    Abstract:

    This paper briefly examines the contributions of Transaction Cost Economics (TCE) to antitrust analysis, focusing on vertical integration and its contractual substitutes, mainly, minimum and maximum resale price maintenance, vertical nonprice restraints, tying, bundled discounts and exclusive dealing and related exclusionary contracts. TCE generally assumes that business firms organize their activities so as to maximize their value, which they can do both by economizing and also by obtaining higher prices. Sensible antitrust policy recognizes that both advantageous contracting and monopoly can be profitable to a firm, and it can be expected to pursue both when they are available. Nevertheless, the opportunities for economizing are many, while those for monopoly are relatively few. Further, firms evaluate alternatives from their present perspective, which necessarily includes the consequences of past decisions. The movement of resources from the current position is Costly, and one of these Costs is that of relying on the market. One of the first choices firms must make is whether to use internal production or external procurement for a particular input or process. When products and distribution are specialized, many of a firm’s contractual arrangements with others must necessarily be of long term and somewhat open ended, in the sense that they do not anticipate every conceivable circumstance. Product differentiation tends to produce specialization at all levels, and this has two effects. First, it tends to make firms larger vertically, because the Cost of internal production is relatively lower and the Cost of market procurement relatively higher. Secondly, insofar as a firm uses external procurement its contractual relationships become more durable and more complex because the parties must often make substantial commitments to the technologies and product designs of their trading partners. While all participants are rational, they do not have perfect information and they almost always know more about themselves than about others. A rational firm anticipates that, to the extent uncertainty exists, everyone in the market will try to use new situations to their own advantage, itself included. Transaction Cost Economics builds on these insights, which determine not only what a firm’s boundaries will be, but also who are likely to be its bargaining partners in outside markets and what those bargains will look like. For example, an exclusivity provision in a contract permits a firm to retain some of the control and disciplinary advantages of internal production, while sharing investment Costs and risk.

  • harvard chicago and Transaction Cost Economics in antitrust analysis
    Social Science Research Network, 2010
    Co-Authors: Herbert J. Hovenkamp
    Abstract:

    Since Oliver Williamson published Markets and Hierarchies in 1975 Transaction Cost Economics (TCE) has claimed an important place in antitrust, avoiding the extreme positions of the two once reigning schools of antitrust policy. At one extreme was the “structural” school, which saw market structure as the principal determinant of poor economic performance. At the other extreme was the Chicago School, which also saw the economic landscape in terms of competition and monopoly, but found monopoly only infrequently and denied that a monopolist could “leverage” its power into related markets. Since the 1970s both the structural and Chicago positions have moved toward the center, partly as a result of TCE. For example, already in 1978 Areeda and Turner produced the first volumes of the Antitrust Law treatise, which completely repudiated the leverage theory and abandoned the structural and leveraging positions on vertical integration. A distinctive feature of TCE is that Transactions occur with a limited range of partners depending on limits of knowledge and previous technological commitment, or asset specificity. The question of who trades is at least as important as the terms of trading. TCE analysis of contractual restraints also recognizes that one threat to consumers is double marginalization, which can occur when market power is held by separate firms with complementary outputs. Antitrust is relevant in two ways. First, private arrangements can minimize double marginalization, justifying practices such as tying in markets characterized by single firm dominance or product differentiation. Both tying and bundled discounts operate as a kind of “reverse leveraging,” benefiting consumers. Second, Transaction Costs sometimes explain why private contracting is inadequate for addressing double marginalization problems and thus justify antitrust intervention. TCE has also reinvigorated the link between conduct and exclusion, as illustrated by the Williamson/Areeda-Turner dispute over predatory pricing, and the rise of the antitrust literature on raising rivals Costs. The RRC literature has attempted to restore a meaningful conception of anticompetitive exclusion without a return to the excesses of the structuralist school. Nevertheless, one comparative advantage of both structuralism and the Chicago School was their simplicity. For the structuralists concentration explained everything and inferences were drawn in favor of condemnation. Within Chicago School analysis the impossibility of leveraging and the mobility of resources explained everything and inferences were drawn in favor of exculpation. TCE analysis is more specific to the situation, however, demanding close scrutiny when significant market power is either present or realistically threatened.

  • Harvard, Chicago, and Transaction Cost Economics in Antitrust Analysis
    The Antitrust Bulletin, 2010
    Co-Authors: Herbert J. Hovenkamp
    Abstract:

    Since Oliver Williamson published Markets and Hierarchies, Transaction Cost Economics (TCE) has claimed an important place in antitrust, avoiding the extremes of the structuralist school, which saw...

Steven Tadelis - One of the best experts on this subject based on the ideXlab platform.

  • Transaction Cost Economics in the digital economy a research agenda
    Social Science Research Network, 2020
    Co-Authors: Frank Nagle, Steven Tadelis, Robert Seamans
    Abstract:

    Transaction Cost Economics (TCE) theory has played an important role in understanding when it is more efficient for a Transaction between two parties to occur within the market or within an organization. However, as more Transactions occur in a digitally-mediated fashion, open questions remain as to how TCE applies in the digital economy. In this article, we consider how digital transformation helps us probe the boundary conditions of TCE and how, despite all the changes wrought by digital transformation, TCE can still provide a useful lens to help scholars and practitioners understand the organization of economic activity in the market-based economic system. We highlight three characteristics of digitally-mediated Transactions: reputation mechanisms, private information, and non-pecuniary Transactions and then discuss how these characteristics offer opportunities for future research and lay out a research agenda for this increasingly important area.

  • Transaction Cost Economics in the digital economy a research agenda
    Academy of Management Global Proceedings, 2018
    Co-Authors: Frank Nagle, Steven Tadelis, Robert Seamans
    Abstract:

    We propose to use the Transaction Cost Economics (TCE) framework to develop a better understanding about the nature of organizations in the digital economy. We identify areas that require more rese...

  • Transaction Cost Economics
    Research Papers in Economics, 1995
    Co-Authors: Steven Tadelis, Oliver E. Williamson
    Abstract:

    This important two volume set contains a selection of key articles on Transaction Cost Economics by distinguished scholars including Ronald Coase, Herbert Simon, Kenneth Arrow and Richard A. Posner. As well as addressing key areas such as private ordering and credibility, contracts and organization, internal organization, vertical integration and contracting, the editors have each compiled a new introduction to accompany the set.

Paul L Joskow - One of the best experts on this subject based on the ideXlab platform.

  • Transaction Cost Economics antitrust rules and remedies
    Journal of Law Economics & Organization, 2002
    Co-Authors: Paul L Joskow
    Abstract:

    This article discusses the application of Transaction Cost Economics (TCE) to the specification of antitrust legal rules and antitrust remedies and explains why the application of TCE analysis may lead to very different legal rules and remedies from approaches that ignore TCE considerations. Antitrust legal rules must be sensitive to the attributes of the institutions we rely upon to enforce antitrust policies, the information and analytical capabilities these institutions possess, the uncertainties they must confront in the diagnosis and mitigation of anticompetitive behavior and market structures, and the associated Costs of type I and type II errors implied by alternative legal rules and remedies. Modern imperfect competition theory that fails to take TCE principles into account is likely to lead to poor legal rules and remedies. These conclusions are supported by a discussion of the Kodak case and its progeny and of the proposed divestiture remedies approved by the District Court's decision in the Microsoft case. Copyright 2002, Oxford University Press.

  • Transaction Cost Economics antitrust rules and remedies
    Social Science Research Network, 2001
    Co-Authors: Paul L Joskow
    Abstract:

    This paper discusses the application of Transaction Cost Economics (TCE) to the specification of antitrust legal rules and antitrust remedies and explains why the application of TCE analysis may lead to very different legal rules and remedies from approaches that ignore TCE considerations. Antitrust legal rules must be sensitive to the attributes of the institutions that we rely upon to enforce antitrust policies, the information and analytical capabilities these institutions possess, the uncertainties they must confront in the diagnosis and mitigation of anticompetitive behavior and market structures, and the associated Costs of Type I and Type II errors implied by alternative legal rules and remedies. Modern imperfect competition theory which fails to take TCE principles into account is likely to lead to poor legal rules and remedies. These conclusions are supported by a discussion of the Kodak case and its progeny and of the proposed divestiture remedies approved by the District Court's decision in the Microsoft case.

Alain Verbeke - One of the best experts on this subject based on the ideXlab platform.

  • The Transaction Cost Economics (TCE) theory of trading favors
    Asia Pacific Journal of Management, 2013
    Co-Authors: Alain Verbeke, Liena Kano
    Abstract:

    Trading favors is a pervasive business practice, especially in emerging economies. To date, a range of theories has been utilized to explore trading favors, but most extant studies focus especially on negative aspects of favors (e.g., corruption and bribery). We adopt Transaction Cost Economics (TCE) to analyze systematically trading favors as an economizing practice serving efficiency purposes. From the TCE perspective, trading favors is a component of the relational contracting portion of Transaction governance, and contributes to economizing on bounded rationality and bounded reliability. We hypothesize that trading favors will be more prevalent in (1) macro-contexts characterized by a vacuum of formal institutions as well as by excessive formal rules; (2) cultural contexts where in-group membership is highly valued; (3) high bounded rationality/low bounded reliability contexts where frequent opportunities exist for indirect reciprocity; and (4) cases whereby no asset-specific investment(s) in innovation need to be made by the supplier of the favor. Enforcement mechanisms such as in-group sanctions, access to formal contracting as a complement to favors, possibility of image scoring and incentive compatibility can function as critical components of the trading favors practice. We suggest a classification of favor trading practices based on their link to formal contracting and rate of recurrence, and describe a range of likely impacts.

  • the Transaction Cost Economics theory of the family firm family based human asset specificity and the bifurcation bias
    Entrepreneurship Theory and Practice, 2012
    Co-Authors: Alain Verbeke, Liena Kano
    Abstract:

    We develop a Transaction Cost Economics theory of the family firm, building upon the concepts of family-based asset specificity, bounded rationality, and bounded reliability. We argue that the prosperity and survival of family firms depend on the absence of a dysfunctional bifurcation bias. The bifurcation bias is an expression of bounded reliability, reflected in the de facto asymmetric treatment of family vs. nonfamily assets (especially human assets). We propose that absence of bifurcation bias is critical to fostering reliability in family business functioning. Our study ends the unproductive divide between the agency and stewardship perspectives of the family firm, which offer conflicting accounts of this firm type's functioning. We show that the predictions of the agency and stewardship perspectives can be usefully reconciled when focusing on how family firms address the bifurcation bias or fail to do so.

  • Transaction Cost Economics tce and the family firm
    Entrepreneurship Theory and Practice, 2010
    Co-Authors: Alain Verbeke, Liena Kano
    Abstract:

    Gedajlovic and Carney's application of Transaction Cost Economics (TCE) thinking to the family business builds on TCE's concept of asset specificity. Our analysis augments this application. We focu...

  • towards a theory of regional multinationals a Transaction Cost Economics approach
    2005
    Co-Authors: Alan M Rugman, Alain Verbeke
    Abstract:

    This paper develops new theory to help explain the recent empirical work that demonstrates the profound lack of global sales, with 320 of the 380 largest firms in the world averaging 80% of their sales within their home region. Transaction Cost Economics (TCE) concepts are used to explain why large firms adopt regional, rather than global, strategies. A new theory of international management built to explain regional-level strategy and structure is developed. In this, a firm's geographic scope of sales is limited by the predominant regional reach of its firm level capabilities, due to TCE reasons.

  • Towards a theory of regional multinationals: A Transaction Cost Economics approach
    Management International Review, 2005
    Co-Authors: Alain Verbeke, Alan M Rugman
    Abstract:

    ■ This paper develops new theory to help explain the recent empirical work that demonstrates the profound lack of global sales, with 320 of the 380 largest firms in the world averaging 80% of their sales within their home region. ■ Transaction Cost Economics (TCE) concepts are used to explain why large firms adopt regional, rather than global, strategies.