The birth of the concept of transaction costs: issues and controversies

Abstract

This paper investigates the emergence of the concept of transaction costs in modern economics and explores three controversial issues of the 1970s which keep economists busy to this day: transaction costs require a rethinking of the economic notion of efficiency, suggest switching to a comparative institutional form of analysis, and are difficult to measure. The categories of technological versus institutional efficiency, technological versus institutional transaction costs, and subjective versus objective transaction costs are employed to clarify these issues. Copyright 2000 by Oxford University Press.