- Elgar original reference
Edited by Peter G. Klein and Michael E. Sykuta
Chapter 16: Empirical Methods in Transaction Cost Economics
Michael E. Sykuta Transaction cost economics (TCE), and the New Institutional Economics (NIE) more generally, places a strong emphasis on empirical research. That research, in a number of applied fields, is described throughout this volume. Empirical observation and analysis has played a central role in the development of TCE, going back to Coase’s original inquiry into the nature of the firm (Coase, 1937). Coase’s seminal work was motivated by observations of incongruities between economic theory and the real world, and a desire for a theory of the firm ‘where the assumptions may be both manageable and realistic’ (Coase, 1937, p. 386). This approach has led TCE researchers to crack open not only the black box of production known as the firm, but also the market itself, examining the structures of individual transactions and their implications for firm and market performance. The result is a burgeoning field of empirical research on the causes and consequences of different modes for governing the allocation and coordination of resources in an economy. Is the empirical evidence persuasive? Macher and Richman’s (2008) review of the application of TCE across the range of social science disciplines finds ‘considerable support for the main propositions derived from transaction cost economic theory’ (p. 138) but concludes there are lingering challenges. Oliver Williamson (2000, pp. 605–7) is more bold, calling TCE an ‘empirical success story’. But this view is by no means universal (see, for example, Chapter 25 by Foss and Klein and Chapter 28 by Hodgson, in this...
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