The Challenge of International Rule Making
Appendix A: Transaction Costs and Styles of Organising
Appendix A: Transaction costs and styles of organising This brief note on the transaction costs associated with styles of organisation as forums for international agreements follows the text of the discussion in Chapter 2. It compares an ideal type ‘classic’ organisation with an ideal type ‘new’ style organisation and distinguishes between those costs that are incurred before reaching an agreement and those incurred after. Because some costs apply both before and after they are referred to as ‘coordination costs’. BEFORE AGREEMENT COSTS Most of the considerations suggest lower ‘before agreement’ costs associated with new styles of organization. The institutional costs are lower first because set-up costs are lower. This is because the new bodies involve less contentious negotiations in order to be set up, involving fewer participants in the negotiations and may be established under local rather than international law. Second, running costs are lower. Most operate with small staffs and rely on committeestyle gatherings of experts whose main costs are borne within their home organisations or jurisdictions. Such organisations may also be able to reduce information costs and knowledge costs compared with classic organisations. They are decentralised by nature and composed of specialists in the practical field concerned. Participants are likely to be closer than classic organisations to market or non-government sources of information in part because they may be drawn from outside central government. The considerations are however more balanced in the case of the negotiation costs involved in reaching international agreements in their area of policy concern....
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