BlogMemonicBilderÜber michKontakt

On transaction costs

Andreas Göldi und Bernhard Seefeld haben kürzlich ausgiebig und exzellent über den Classifieds- oder Kleinanzeigenmarkt geschrieben.

Interessant an der Debatte über Transaktionskosten ist, dass es in gewisser Weise ein Replay von früheren Begebenheiten ist. Damals als vom Pferd und Karren auf Stahlross und Schienen umgesattelt wurde, ist in verschiedenen Märkten ähnliches passiert wie heute: Schweinebäuche wurden zum ersten Mal überhaupt über weitere Distanzen handelbar.

Früh mit der Thematik befasst hat sich Ronald Coase (Nobelpreisträger). Hab das in einer früheren Tätigkeit mal genau auseinander genommen:

One of Coase’s (1937) original propositions was that firms and markets are alternative governance structures that differ in their transactions costs. Under certain conditions the cost of organizing an exchange in a market exceeds the cost of coordinating the exchange in a firm. Transaction costs, in this context, consist of ex ante and ex post costs. In the market the ex ante costs include the expense of searching for a trading partner, specifying the product(s) to be traded and – most importantly – negotiating the price and contract. The ex post transaction costs are incurred after the contract has been signed but before the entire transaction has been completed. These include late delivery, non-delivery or non-payment and – most importantly – problems of quality control [1].

Williamson added substantial precision to Coase’s argument by identifying the types of exchanges better conducted within the boundaries of a firm than within a market (Williamson 1975). Williamson suggests that transaction costs include both the direct costs of the transaction and the possible opportunity costs of inferior governance decisions. His framework rests on two main assumptions about human behavior (bounded rationality in a complex world and opportunism) and two key dimensions of a transaction (asset specificity, and uncertainty). The theory further recognizes that the operation of a market is not without cost as is assumed in classical economic theory. The firm then becomes a substitute for the market mechanism – created to reduce transaction costs.

The original transaction cost framework propounds a discrete choice between the market mechanism and internal organization. Williamson extended the framework and the current version of the theory explicitly endorses hybrid forms and acknowledges that features of internal organization can be achieved without ownership or complete vertical integration.

Asset specificity or the requirement of transaction-specific investments refers to the transferability of the assets that support a given transaction:

“A condition of bilateral dependency builds up as asset specificity deepens. The ideal transaction in law and economics – whereby the identities of buyers and sellers are irrelevant – obtains when asset specificity is zero. Identity matters as investments in transaction-specific assets increase, since such specialized assets lose productive value when redeployed to best alternative uses and by best alternative users.” (Williamson 1991)

Williamson has identified six sorts of asset specificity:
  • Site specificity.
  • Physical asset specificity.
  • Human asset specificity.
  • Brand name capital.
  • Dedicated assets.
  • Temporal specificity.
Closely related to the question of asset specificity of a given transaction is the analysis of vertical integration. A typical focus is on a manufacturing firm’s decision to integrate backward into the supply of materials or components or to integrate forward into distribution and sales.

The cost of using the market is much clearer than the costs of using the firm. The transaction cost framework explains well vertical integration and alliance decisions, disintegration of existing value systems, management of distribution channels, and the size of its Internet equivalent, the value web.

[1] The distinction between ex ante and ex post is an important one. The principal ex ante problem is that, because of bargaining difficulties, the prevailing market price may not be right. The principal ex post problem, however, is that the transaction may never be completed because one party may renege on the contract. The problem undermines the entire transaction whether the price is appropriate or not.



No new comments allowed (anymore) on this post.