Beyond Keynes, Volume Two
Edited by Shelia C. Dow
Chapter 4: Transactions costs and uncertainty: theory and practice
4. Transactions costs and uncertainty: theory and practice Peter J. Buckley and Malcolm Chapman1 I LONGITUDINAL AND COMPARATIVE RESEARCH ON TRANSACTIONS COSTS Transactions costs exist in prospect, in retrospect and in process. Their analysis requires a many-faceted approach and poses a challenge for economics. Transaction costs have been described (by Williamson amongst others) as a bridge to other disciplines from economics, but it is essential to realize that bridges are often two-way conduits and that, through the analysis of transaction costs, economics opens itself up to alien inﬂuences. Transactions cost-based decisions are non-routine. They cannot be covered by a management philosophy predicated on routine operations. Such decisions are analogous to innovation (for an analysis of the management of innovation see Buckley and Casson, 1992). The decisions involved are idiosyncratic and dynamic. The dynamic nature of transaction costs opens up problem areas for traditional theory. Standard transaction costs analysis, based on a comparative static framework, runs the risk of justifying the (any) status quo, and has diﬃculty in specifying the conditions which shift the world from one state (a ﬁrm/market conﬁguration, for example) to another. The elusive nature of transaction costs and their relationship to other types of cost are also in need of clariﬁcation. There are essentially three ways of tackling this problem. The ﬁrst is to adopt a prospective method, specifying a model by setting out the initial conditions, the key forces driving events and the mechanisms by which these independent variables aﬀect the...
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