Transaction Costs

Business relationships in internet-based electronic markets: the role of goodwill trust and transaction costs

by Raluca Bunduchi

Trust, power and transaction costs in B2B exchanges — A socio-economic approach

by Raluca Bunduchi

The Web-based Face-to-Face Economy

by Fabian Bethge

9. Tie Failure: A Literature Review

by Rob Jansen

New Data on the Bulgarian Transaction Sector: 1997 to 2006

by Maria Ivanova

Henrik Egbert1, Maria Ivanova2*, Georgi Chobanov3

Chobanov and Egbert (2007) measured the transaction sector between 1997 and 2003 for the Bulgarian economy. They... more Chobanov and Egbert (2007) measured the transaction sector between 1997 and 2003 for the Bulgarian economy. They report an increase in the transaction sector from below 40% to more than 50% of GDP. This indicates a fundamental institutional change within a short period of time. Here, we repeat this study because more precise data have become available since January 2008. The National Statistical Institute recalculated the GDP and it is the basic reference point in our study. Furthermore we are able to include the years 2004 to 2006, thus providing data for a full decade. We also improved the methodology of Chobanov and Egbert coming closer to the original concept of the transaction sector.

TRANSACTION EMPLOYMENT IN THE USA AND BULGARIA 1997 TO 2006

by Maria Ivanova

Maria Ivanova/Henrik Egbert

We compare transaction employment in the USA and Bulgaria from 1997 to 2006. Transaction employment reflects the... more We compare transaction employment in the USA and Bulgaria from 1997 to 2006. Transaction employment reflects the labour inputs which are necessary to run institutions in a national economy. We measure these inputs as a share of GDP. Our results show that a relatively constant share of about 30% of GDP relates to transaction employment in the USA. In the transitional economy of Bulgaria this share increases from 8% to 12 %. This paper deals with a particular aspect of the transaction sector concept and adds to the discussion on the methodology for cross-country comparisons.

MEASURING THE REAL INVESTMENT OF RESOURCES IN THE TRANSACTION SECTOR

by Maria Ivanova

Wallis and North (1986) construct a measurement of the transaction costs and name it transaction sector. They warn... more Wallis and North (1986) construct a measurement of the transaction costs and name it transaction sector. They warn that the growth of its size may result from different reasons and not necessarily be due to newly invested resources. In this paper I distinguish four types of growth and develop a methodology which can catch a real investment in the transaction sector. It relies on occupational classifications. An empirical application is done for the USA from 1999 to 2008 and shows that, in general, new resources were added to the transaction sector steadily. This, however, is concomitant with a real growth of GDP; therefore one can conclude that the productivity of the transaction sector has not changed.

An Organizational Learning Perspective on the Contracting Process

by Fabrice Lumineau

Lumineau F., Fréchet M., & Puthod D. 2011. “An Organizational Learning Perspective on Contract Design.” Strategic Organization, 9(1): 8-32.

The contracting process is a crucial step in alliance development and its success. However, the existing literature... more The contracting process is a crucial step in alliance development and its success. However, the existing literature reveals surprisingly little investigation into how organizational learning relates to the process of contract making. We therefore conducted an in-depth longitudinal study of the alliance contracting process in the animated film industry. First, our findings suggest that during the contracting process, firms can learn about the way to deal with the contracting process, about themselves and their partner, and about the transaction features. Second, the case analysis indicates a combination of experiential, vicarious, and inferential learning mechanisms. Combining these insights into the objects and the mechanisms of learning during the contracting process, we discuss how contracting and learning processes are related and analyze the role of the contracting process in supporting organizational learning. The findings show that the drafting of contractual clauses fosters learning and, in turn, this learning triggers new contractual negotiations. Hence we suggest that the alignment between transaction features and the choice of contractual governance results from learning during the contracting process. We then propose avenues for future research.

Explaining Momentum Strategies using Intrinsic Price Fluctuations

by Nick Baltas

Working Paper; November 2011.

To be presented at the following conferences:
- 24th Australasian Finance & Banking Conference (AFBC), Sydney, Australia, December 2011.
- 13th Annual Conference of the National Business & Economics Society (NBES), Maui, USA, March 2012.

Research supported by a Research Grant (£10,000) from Centre for Hedge Fund Research (CHFR) of Imperial College Business School (December 2008).

Abstract: This paper focuses on cross-sectional equity momentum patterns by modeling a stock’s price path as the... more Abstract: This paper focuses on cross-sectional equity momentum patterns by modeling a stock’s price path as the interaction between a long-term growth component and a number of fluctuating price components that oscillate around the long-term trend at various distinct frequencies. Using this specification, the results are consistent with a behavioural overreaction-to-private-information and underreaction-to- public-information explanation of cross-sectional explanation of momentum patterns. Cross-sectional momentum profitability is found to be robust to realistic transaction costs and a 6-month holding period appears to be the optimal tradeoff investment horizon between the short-term and the longer-term effect of the transaction costs. Simple stop-loss rules are shown to improve the performance of strategies with long-term holding horizon by discarding big and growth stocks, which achieve higher levels of price efficiency and therefore realise their momentum potential faster than small and value stocks.

Analysing institutional arrangements for agrienvironmental schemes in Europe: ITAES WP4 Final Report

by Melf-Hinrich Ehlers

The Separation/Specification Dilemma in Contracting: The Local Government Experience in Victoria

by Janine O'Flynn

The impact of outsourcing on the transaction costs and boundaries of manufacturing

by Ian McCarthy

McCarthy I.P., and Anagnostou A. 2004. The Impact of Outsourcing on the Transaction Costs and Boundaries of Manufacturing. International Journal of Production Economics, 88(1): 61-71.

This paper discusses the concept of outsourcing, along with an account of the economic benefits that are achieved by... more This paper discusses the concept of outsourcing, along with an account of the economic benefits that are achieved by reconfiguring the organization and reducing the transaction costs of providing products and services. With the practice of outsourcing experiencing exceptional growth, this paper examines the corresponding change (decline) in UK manufacturing as an economic activity, and considers how the economic benefits of outsourcing alter the contribution that an organization makes to a sector’s gross domestic product. To assess this issue, an input–output methodology for measuring economic restructuring in UK manufacturing is presented.

Transaction Costs, Equipment Leasing, and the Economic Theory of the Firm

by Jamison Graff

Policy Analysis for Tropical Marine Reserves: Challenges and Directions

by Murray Rudd

Rudd, M. A., M. H. Tupper, H. Folmer, and G. C. van Kooten. 2003. Policy analysis for tropical marine reserves: directions and challenges. Fish and Fisheries 4:65-85.

Marine reserves are considered to be a central tool for marine ecosystem-based management in tropical inshore... more Marine reserves are considered to be a central tool for marine ecosystem-based management in tropical inshore fisheries. The arguments supporting marine reserves are often based on both the nonmarket values of ecological amenities marine reserves provide and the pragmatic cost-saving advantages relating to reserve monitoring and enforcement. Marine reserves are, however, only one of a suite of possible policy options that might be used to achieve conservation and fisheries management objectives, and have rarely been the focus of rigorous policy analyses that consider a full range of economic costs and benefits, including the transaction costs of management. If credible analyses are not undertaken, there is a danger that current enthusiasm for marine reserves may wane as economic performance fails to meet presumed potential. Fully accounting for the value of ecological services flowing from marine reserves requires consideration of increased size and abundance of focal species within reserve boundaries, emigration of target species from reserves to adjacent fishing grounds, changes in ecological resilience, and behavioural responses of fishers to spatially explicit closures. Expanding policy assessments beyond standard cost–benefit analysis (CBA) also requires considering the impact of social capital on the costs of managing fisheries. In the short term, the amount of social capital that communities possess and the capacity of the state to support the rights of individuals and communities will affect the relative efficiency of marine reserves. Reserves may be the most efficient policy option when both community and state capacity is high, but may not be when one and/or the other is weak. In the longer term, the level of social capital that a society possesses and the level of uncertainty in ecological and social systems will also impact the appropriate level of devolution or decentralization of fisheries governance. Determining the proper balance of the state and the community in tropical fisheries governance will require broad comparative studies of marine reserves and alternative policy tools.

Assessing Transaction Costs of Project-Based Greenhouse Gas Emissions Trading

by Camille Antinori

Interpersonal Trust and Voluntary Associations: Examining Three Approaches

by Jeremy Kendall

The Hidden Costs of Offshoring: The Impact of Complexity, Design Orientation and Experience

by Stephan Manning

Full source: Larsen, M.M., Manning, S, Pedersen, T. 2011. “The Hidden Costs of Offshoring: The Impact of Complexity, Design Orientation, and Experience", Academy of Management Best Paper Proceedings. Forthcoming. 

This paper investigates hidden costs of offshoring, i.e. unexpected and often hard to measure costs resulting from the... more This paper investigates hidden costs of offshoring, i.e. unexpected and often hard to measure costs resulting from the relocation of business tasks and activities outside the home country. Particularly, the paper shows that hidden costs can be explained by the degree of offshoring complexity. Firms’ organizational design orientation and offshoring experience negatively moderate the relationship between complexity and hidden costs.

Developing an Iceberg Theory of Cost Comparisons in Relation to Sourcing Decisions in the UK Fashion Industry, Journal of the Textile Institute, Supply Chain Special Edition, Vol.93, No3, ISSN:0400-5000, Manchester, Textile Institute

by Tony Hines

Developing an Iceberg Theory of Cost Comparisons in Relation to Sourcing Decisions by UK Fashion Retailers
Journal of the Textile Institute
Volume 93, Issue 3, 2002, Pages 3 - 14
Author: T. Hines
DOI: 10.1080/00405000208658354

The paper begins with an explanation of the industry context in which buying decisions were made. Research methodology... more The paper begins with an explanation of the industry context in which buying decisions were made. Research methodology is then discussed, followed by an examination of the role of the buyer in the buying decision, and how performance measures implemented by retail organisations influence those decisions. The dysfunctional nature of the decision and its impact upon the buying teams and organisational performance and serious implications for sourcing decisions are discussed in the next section. The main part of the paper is devoted to an explanation of the iceberg theory of cost comparisons developed as a result of this work. Sources of competitive advantage are briefly identified for UK suppliers and retailers before some of the key findings and implications for managers in taking sourcing and purchasing decisions are discussed further. The grounded theory developed as part of this research, and the contribution it makes to developing a better understanding of sourcing and purchasing decisions in this industrial setting, are summarised before further areas for research are identified.

The Automated Payment Transaction Tax

by Edgar Feige

From: Economic Policy, 2000. vol.15(31) PP.473-531

America’s Underground Economy: Measuring the Size, Growth and Determinants of Income Tax Evasion in the U.S

by Edgar Feige

Co-authored with Richard Cebula

This study empirically investigates the extent of non compliance with the tax code and the determinants of federal... more This study empirically investigates the extent of non compliance with the tax code and the determinants of federal income tax evasion in the U.S. Employing the most recent data we find that 18-19% of total reportable income is not properly reported to the IRS, giving rise to a “tax gap” approaching $500 billion dollars. Three time periods are studied, 1960-2008, 1970-2008, and 1980-2008. It is found across study periods that income tax evasion is an increasing function of the average effective federal income tax rate, the unemployment rate, public dissatisfaction with government, and per capita real GDP (adopted as a measure of income), and a decreasing function of the Tax Reform Act of 1986 (during its first two years of being implemented). Modest evidence of a negative impact of IRS audit rates on tax evasion is also detected.

Keywords: Underground economy; unreported economy; tax evasion; tax gap; non compliance; Federal income tax.

JEL Classifications: E26; H26; O17; E41; E52