Managing Transaction Costs in the Era of Globalization

Managing Transaction Costs in the Era of Globalization

Advances in New Institutional Analysis series

Frank A.G. den Butter

Frank A.G. den Butter explains the importance and means of keeping transaction costs as low as possible. He illustrates how this transaction management can contribute to making firms and nations more competitive by exploiting gains from the division of labour and international fragmentation of production, and uses relevant case studies to illustrate how value is created by reducing transaction costs. Policy recommendations for strengthening the competitive position of trading nations and reducing implementation costs of government policy are presented, and management methods for creating value in organizing production on a global scale are prescribed.

Preface and acknowledgements

Frank A.G. den Butter

Subjects: economics and finance, institutional economics, international economics

Extract

The inspiration for this book comes from two experiences. First, a flower merchant who, in the mid 1990s, I overheard in the departure lounge of Heathrow Airport. With inimitable charm he phoned a British customer to sell a batch of flowers available in Aalsmeer. A good example of a Dutch tradesman’s skill. The second experience was the ado of my sons, and many other children, with Flippos, the cartoon disks collected from chip packets. That made me think back to the barter with pictures of football quartets during my own schooldays. The latter experience made me write a column (‘Little traders’) which is included in this book in Box 1.1. When the Scientific Council for Government Policy (WRR) in the Netherlands in 2000 planned a new report, I suggested ‘the Netherlands as a Trading Nation’ as a subject. It resulted in a report to the government which was published in 2003. The question is how the Netherlands and similar trade-oriented modern open economies can keep up and strengthen their positions as a trading nation in the globalizing world. This book stems from a recommendation in the WRR report, namely that there is a need for further research on that question and for an institute that facilitates that research and disseminates knowledge. With that purpose, the foundation Handelsland.nl was created. This foundation is a sponsor of the newly-founded Research Institute for Trade and Transaction Management (RITM) at the VU University Amsterdam. The book is an outcome of the research programme of...