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Topic: Transaction cost

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Transaction cost

Ronald Coase

Coase theorem

Economics

Institutional economics

Scarcity

New institutionalism

Corporatism

Docklands

	THE SIMPLEST, MOST ELEMENTARY CASE FOR THE UTILITY OF TRANSACTION COST ANALYSIS
		Coase explains that, although the "gains which accrue from the existence of the organization …; come from a reduction in transaction costs …, the main transaction costs that are saved are those which would otherwise have been incurred in market transactions between the factors now cooperating within the organization" and the organizers of the organization.
		In this problem there are two kinds of cost: (1) carrying costs, which include the cost to the retailer of capital invested in inventory, storage costs, etc., and (2) transaction costs, which include the cost of ordering, shipping and receiving, processing, and otherwise handling deliveries.
		Total transaction costs are assumed to be equal to the shipping and handling cost per item (b) plus the cost* per order (a*) for such activities as accounting for and processing the order.
	www.willamette.edu /~fthompso/MgmtCon/Transcost.html (2231 words)

	Transaction cost - Wikipedia, the free encyclopedia
		Bargaining costs are the costs required to come to an acceptable agreement with the other party to the transaction, drawing up an appropriate contract and so on.
		The term "transaction cost" is frequently thought to have been coined by Ronald Coase, who used it to develop a theoretical framework for predicting when certain economic tasks would be performed by firms, and when they would be performed on the market.
		Transaction costs have been broadly defined by Steven N. Cheung as any costs that are not conceivable in a "Robinson Crusoe economy" -- in other words, any costs that arise due to the existence of institutions.
	en.wikipedia.org /wiki/Transaction_cost (1064 words)

	Translation as a Transaction Cost
		Transaction costs should thus be kept not only below the upper threshold but also low enough to allow for a range of possible successful games corresponding to the probabilistic calculations of both actors.
		If transaction costs are so low that all information is uniformly available to everyone, each actor can negotiate with every other actor, shopping around to fix their investments at the lowest possible thresholds.
		Assuming that high transaction costs are generally to be reduced, actors should select their strategy according to the probable duration of the cooperation situation, which should be seen as including whatever communication is needed to ensure continued cooperation.
	www.fti.uab.es /sgolden/colloquium/negot.html (5938 words)

	Annotated Bibliography on Transaction Cost Economics (Site not responding. Last check: 2007-10-09)
		A microanalytic assessment of alternative modes of organization entails (1) an identification of the relevant transaction cost dimensions for assessing performance, (2) a description of the organizational and operating properties of alternative modes, and (3) a comparative evaluation of alternative modes in terms of their transaction cost attributes.
		The model, derived from transaction cost analysis as developed principally by Williamson, is formulated as a logistic function, which is estimated with data from the electronic components industry.
		Contrary to the transaction cost model, neither frequency of transactions nor integration of specificity and environmental uncertainty is significantly related to integration.
	dass.missouri.edu /faculty/hjames/TCE (11662 words)

	Cost - Wikipedia, the free encyclopedia
		Opportunity cost, also referred to as economic cost is the value of the best alternative that was not chosen in order to pursue the current endeavour--i.e., what could have been accomplished with the resources expended in the undertaking.
		External costs (also called externalities), in contrast, are the costs that people other than the buyer are forced to pay as a result of the transaction.
		A psychic cost is a subset of social costs that specifically represent the costs of added stress or losses to quality of life.
	en.wikipedia.org /wiki/Cost (734 words)

	madisonian.net » transaction costs and fair use
		The transactions we tend to think about when discussing fair use and the transaction cost story tend to be transactions between the copyright owner and the user (e.g., Google), and in evaluating the story (are transaction costs high or low?), we tend to retain our focus on these parties.
		While transaction costs could be defined to encompass any barrier that would preclude reaching a socially optimal outcome, I think such a broad vision of transaction costs conflates much too much.
		My primary point was that the transaction cost analysis for fair use is overly narrow (generally and in the context of analyzing the Google Print case); with respect to the last sentence that you noted, I should probably emphasize the word “potential”.
	madisonian.net /archives/2006/01/18/transaction-costs-and-fair-use (1177 words)

	GSCS Information Services Ltd - Transaction Cost Management FAQs
		However transaction cost analysis is critical in establishing the most resource efficient and cost effective execution strategies for different types and sizes of trades being completed for various portfolio managers in a wide range of securities.
		Good transaction cost analysis allows traders to benefit from the analysis offered by the service provider, which will almost certainly contain insights about general patterns of trading and performance that might otherwise be lost.
		Costs as a whole are the second most important factor in long term returns, coming after asset allocation but ahead of investment manager selection in importance, as assessed by independent studies.
	www.gscs.info /research-tcm-faqs-im.asp (2086 words)

	Cost Model. A Mixed Transaction Cost Model. Unwalla
		In this chapter a cost model is derived which relates the OLTP cost penalty of partitioning on a single column to the workload reduction for MIS queries gained by such partitioning.
		The multi-column cost model is based on the ideas presented above, with additional heuristics to deal with the inherent problems of the combinatorial computations involved in the precise determination of the optimum partitioning level for all of the columns.
		Once the costs and benefits of a given partitioning strategy have been determined, changes in file size itself will make little difference to the overall analysis, assuming that the query set, the ratio of MIS queries to OLTP transactions, and the data distributions do not change.
	www.techscribe.co.uk /thesis/chapter5.html (5905 words)

	Transaction Cost Economics
		Search and information costs are costs such as those incurred in determining that the required good is available on the market, who has the lowest price, etc. Bargaining costs are the costs required to come to an acceptable agreement with the other party to the transaction, drawing up an appropriate contract, etc..
		Policing and enforcement costs are the costs of making sure the other party sticks to the terms of the contract, and taking appropriate action (often through the legal system) if this turns out not to be the case.
		Transaction costs consist of costs incurred in searching for the best supplier/partner/customer, the cost of establishing a supposedly "tamper-proof" contract, and the costs of monitoring and enforcing the implementation of the contract.
	www.istheory.yorku.ca /transactioncosteconomics.htm (1114 words)

	The Prize in Economics 1991 - Press Release
		Such costs are commonly known as transaction costs and they account for a considerable share of the total use of resources in the economy.
		When transaction costs are taken into account, it turns out that the existence of firms, different corporate forms, variations in contract arrangements, the structure of the financial system and even fundamental features of the legal system can be given relatively simple explanations.
		In cases where transaction costs absolutely prevent a contract, there is - as inferred by the theorem - a tendency for other institutional arrangements to arise, for example a firm or amended legislation.
	nobelprize.org /nobel_prizes/economics/laureates/1991/press.html (1834 words)

	[No title] (Site not responding. Last check: 2007-10-09)
		Transaction cost economics (Williamson, 1992) argues that, under conditions of high uncertainty and small numbers of alternative suppliers, collaboration can improve cost-effectiveness and therefore improve the profitability and competitive performance of an organization.
		Also, the costs of internal organization are likely to be greater for activities outside the firm's main area of expertise.
		Unless they have the latitude to absorb it into the cost structure of other components, both firms have to pass the cost down to the consumer.
	www.lycoszone.com /info/transaction-cost-economics--firms.html (519 words)

	Transaction Costs and the Social Costs of Online Privacy
		Transaction costs stem from a wide variety of sources and are believed to represent over one third of all economic activity in the United States.
		Transaction costs are so firmly ingrained in the physical world that we largely take them for granted and naturally incorporate their effects into our business thinking when we move online.
		Instead, the cost created by the factory's consumption of clean air is passed on to the surrounding community in the form of pollution [15].
	firstmonday.org /issues/issue6_5/sholtz/index.html (9728 words)

	Transaction Cost of Electronic Health or Medical Records (EHR)
		The per transaction cost of EHR was calculated by dividing the present value of five year cost of EHR by the number of visits during the same time period.
		Economic cost of EHR services differs from accounting cost as it includes the value of assets or personal services donated to the program.
		A key factor in estimation of cost per transaction is the estimation of number of EHR services during the budget time period.
	gunston.doit.gmu.edu /healthscience/740/CostOfEHR/RateSetting.asp (1028 words)

	Transaction Cost Analysis (Resources)
		Highly specific assets represent sunk costs that have relatively little value beyond their use in the context of a specific transaction.
		Demsetz, Harold, (1968) "The Cost of Transacting," Quarterly Journal of Economics, 82, 33-53.
		Transaction costs and the collection of information: presale measurement on private timber sales.
	faculty.washington.edu /~krumme/readings/transaction_cost.html (1295 words)

	MeasureIT - Issue 3.04 - Experience in using Microsoft’s Transaction Cost Analysis for Infrastructure Sizing by ...
		Hence, the cost of transactions for the target application is approximated to suitable ones in the reference application.
		In this step of TCA the cost for entire target usage profile is calculated, using the inputs available in Table 1, Table 2 and the information on the average session length for each user.
		The projected cost was 1815.69 P3MC which essentially meant that the Web server had to be scaled-out by a factor of 2.26, as indicated in Figure 2.
	www.cmg.org /measureit/issues/mit21/m_21_2.html (2077 words)

	The Transaction Cost Approach to the Theory of the Firm
		Transaction cost refers to the cost of providing for some good or service through the market rather than having it provided from within the firm.
		In order to carry out a market transaction it is necessary to discover who it is that one wishes to deal with, to conduct negotiations leading up to a bargain, to draw up the contract, to undertake the inspection needed to make sure that the terms of the contract are being observed, and so on.
		Coase contends that without taking into account transaction costs it is impossible to understand properly the working of the economic system and have a sound basis for establishing economic policy.
	www.sjsu.edu /faculty/watkins/coase.htm (952 words)

	The Hindu Business Line : Trickery of transaction cost
		Douglass C. North, who got the Nobel for his contribution on transaction cost and related topics, said that Coase in 1960 had identified "the crucial connection between institutions, transaction costs, and neo-classical theory.
		However, transaction cost as a tool of manipulation of cost of production on paper is not a monopoly of India, nor of any developing country.
		Even in the US, the transaction sector used to be 45 per cent of GNP in 1970, according to a paper North had written jointly with John Wallis in the Journal of Institutional and Theoretical Economics in 1999.
	www.thehindubusinessline.com /2005/04/14/stories/2005041400020900.htm (606 words)

	Crash in transaction cost as boost to capital market growth (Site not responding. Last check: 2007-10-09)
		Apart from the relatively high transaction cost in the secondary capital market (the market for the existing securities), stakeholders believe that cost of fresh funds in the primary market (market for new issues by fund seekers) is higher in the Nigerian capital market than many other jurisdictions.
		Disturbed by the negative implications high cost of fund could have on investments, SEC recently arranged a meeting to appeal to operators and other regulators in the market to reduce the cost.
		If the reduction in the cost of transaction on the market is effected, phenomenal growth in the number of listed companies, volume and value of trading as well as market capitalization would be achieved.
	www.businessdayonline.com /?c=56&a=11430 (606 words)

	Transaction Cost 1 (Site not responding. Last check: 2007-10-09)
		Transaction Cost Analysis is a micro-analytic framework with a strong emphasis on the behavioral, opportunistic, and information asymmetric characteristics of the production system.
		By using cost as a basis of measuring organizational behavior, it assumes that economic actors are fully aware of all associated cost considerations, that they make economic decisions cognizant of those costs, and have the ability to predict the outcome of each decision.
		Strategic alliances are mechanisms between markets and hierarchies which afford firms the ability to achieve minimum cost arrangements not possible in a strict organizational dichotomy of firms and markets.
	uregina.ca /~cecil11b/Flagships/TCA1.htm (436 words)

	Williamson - Transaction Cost Approach (Site not responding. Last check: 2007-10-09)
		The transaction cost approach regards the transaction as the basic unit of analysis and holds that understanding of transaction cost economizing is central to the study of organizations through assessing how their governance structures serve to economize on these transaction costs.
		Transaction cost analysis is about the comparative costs of planning, adapting, and monitoring task completion under alternative governance structures" p.
		If assets are nonspecific, markets enjoy advantages in both production cost and governance cost respects; static scale economies can be more fully exhausted by buying instead of making; markets can also aggregate uncorrelated demands, thereby realizing risk-pooling benefits; and external procurement avoids many of the hazards to which internal procruement is subject".
	faculty.babson.edu /krollag/org_site/org_theory/granovet_articles/william_trans.html (554 words)

	Warehouse Design Depends on Transactions and Inventory
		The cost figure includes equipment cost and regular maintenance and operating costs averaging over 10 years at 2,000 hours a year.
		In the case of captive equipment, such as the carousel and the S/R machines, the number of units is determined by inventory quantity and the number of aisles or storage units, in addition to the transaction rate.
		When the count based upon inventory is greater than the count based upon transactions, the total cost figure is then adjusted to lower costs by the amount of excess equipment.
	www.strategosinc.com /warehouse_transaction.htm (576 words)

	Masood Mortazavi's Weblog
		Douglass C. North, the Nobel Economics Laureate (1993), has applied transaction cost economics, an economic theory originally founded by Ronald H. Coase (the 1991 Nobel Economics Laureate) to develop a new theory of institutional economics.
		The jump from "the more steps in the production process" to "higher transaction costs" may be surprising for some but a review of the bullwhip effect in supply chain management should clarify the connection.
		As Oliver Williamson, the noted transaction cost economics scholar, has shown, transactions can be characterized by the associated uncertainties, their frequency and the specific assets devoted to them.
	blogs.sun.com /MortazaviBlog/entry/technology_and_transaction_costs_economics (621 words)

	[No title] (Site not responding. Last check: 2007-10-09)
		These costs come from four major sources, the first two arising from a characteristic of human nature while the other two from environmental factors.
		Antitrust rules thus embody both potential benefits (the promotion of competition) and potential costs (the reduction of competition and innovation, the augmentation of private sector and judicial costs).
		When it is costly to transact (transaction costs are present) and automatic adjustment is prevented, then institutions matter.
	www.lycoszone.com /info/transaction-cost-economics.html (362 words)

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