Minimize Transaction Costs Research Articles

Deep reinforcement learning for portfolio management of markets with a dynamic number of assets

This work proposes a novel portfolio management method using deep reinforcement learning on markets with a dynamic number of assets. This problem is especially important in cryptocurrency markets, which already support the trading of hundreds of assets with new ones being added every month. A novel neural network architecture is proposed, which is trained using deep reinforcement learning. Our architecture considers all assets in the market, and automatically adapts when new ones are suddenly introduced, making our method more general and sample-efficient than previous methods. Further, transaction cost minimization is considered when formulating the problem. For this purpose, a novel algorithm to compute optimal transactions given a desired portfolio is integrated into the architecture. The proposed method was tested on a dataset of one of the largest cryptocurrency markets in the world, outperforming state-of-the-art methods, achieving average daily returns of over 24%.

From transaction costs to transaction value: Overcoming the frictional paradigm

The transaction cost economics has accumulated a mass of dogmatic concepts and assertions that have acquired high stability under the influence of path dependence. These include the dogma about transaction costs as frictions, the dogma about the unproductiveness of transactions as a generator of losses, “Stigler—Coase” theorem and the logic of transaction cost minimization, and also the dogma about the priority of institutions providing low-cost transactions. The listed dogmas underlie the prevailing tradition of transactional analysis the frictional paradigm — which, in turn, is the foundation of neo-institutional theory. Therefore, the community of new institutionalists implicitly blocks attempts of a serious revision of this dogmatics. The purpose of the article is to substantiate a post-institutional (alternative to the dominant neo-institutional discourse) value-oriented perspective for the development of transactional studies based on rethinking and combining forgotten theoretical alternatives. Those are Commons’s theory of transactions, Wallis—North’s theory of transaction sector, theory of transaction benefits (T. Sandler, N. Komesar, T. Eggertsson) and Zajac—Olsen’s theory of transaction value. The article provides arguments and examples in favor of broader explanatory possibilities of value-oriented transactional analysis.

Blockchain and institutional complexity: an extended institutional approach

AbstractFrom a modern institutional economics viewpoint, blockchain is an institutional technology that minimizes transaction costs and greatly reduces intermediation. Through an analysis of blockchain, I demonstrate the possibilities of extended institutional approach – a new generation of complexity-focused methodologies and theories of institutional analysis that complement and expand the standard institutional paradigm. By using the theory of transaction value, I argue blockchain technologies not only will lead to a significant reduction in transaction costs but will also reorient intermediaries toward improving the quality of transactions and expanding the offer of additional transaction services. The theory of institutional assemblages indicates it is impossible to form a homogeneous system of blockchain-based institutions associated exclusively with the principles of decentralization, transparency, and openness. Blockchain-based institutions will be of a hybrid and conflicting nature, combining elements of opposing institutional logics – regulatory and algorithmic law, Ricardian and smart contracts, private and public systems, and uncontrollability and arbitration.

On the Question of International Currency, Internationalization of the Yuan, and Settlements in National Currencies

ABSTRACT The subject of this article is currencies for international settlements. The world has seen the emergence of demand for alternatives to the dollar and euro. However, minimal transaction cost remains the main property of a vehicle currency, and China’s ambition to internationalize the yuan is reevaluated in this context. Moreover, yuan settlements primarily handle China’s payments for imports in its national currency. Russia is one of the countries for which the currency is underutilized in its own foreign trade payments. The risks emerging from geopolitical conflicts and Russia’s integrating role in the Eurasian region will facilitate an increase in ruble settlements. It is in the national interest to create a SWIFT-independent system of internal interbank transfers in foreign currencies and to finish the transition to cross-border settlements in rubles within the Eurasian Economic Union in particular.

Solving multi-objective supplier selection and quota allocation problem under disruption using a scenario-based approach

Nowadays, experts believe there are abundant sources of risks in a supply chain. An important group of risks against a supply chain is the disruption risks group, which disturbs the flow of material in the chain and may lead to inefficiency in providing the final product in the supply chain. The aim of this article is to investigate the control of costs of disruption in a supply chain by considering the possibility of disruption. In fact, this research focuses on determining the best combination of suppliers and quota allocation with regards to disruption in suppliers. The proposed multi-objective mathematical model in this paper is a mixed-integer programming (MIP) model with objective functions to minimize transaction costs of suppliers, expected costs of purchasing goods, expected percentages of delayed products, expected returned products, and to maximize expected evaluation scores of the selected suppliers. Due to the uncertainty of demand and supplier disruption in the real world, their values are also considered uncertain; the proposed multi-objective model is studied by using a scenario-based stochastic programming (SP) method. In this method, all possible predictions for demand and disruption values are simultaneously included in the model; objective function results have more optimal value than a separate solution of the model for each predicted value.

Post-institutionalism: Beyond the institutional mainstream

The article discusses the internal dualism of modern institutional economics, manifested in division of orthodox or mainstream institutionalism (its axiomatics and dogmatics are represented by the Standard Model) and its opposition post-institutionalism. An agenda for promising post-institutional studies is proposed, covering a wide range of discussion issues beyond the Standard Model — from the transition to integrative interpretations of institutions to the introduction of the Evo-Devo-paradigm of analysis of institutional evolution. A reorientation of the transactional analysis from minimizing transaction costs to maximizing the transaction value generated by institutions is proposed. The normocentric paradigm of institutional theory is discussed, considering any forms and trajectories of institutional evolution outside of the evaluation criteria, abandoning the tradition of negative labeling of institutional anomalies. The article demonstrates that in the focus of post-institutionalism there is institutional complexity, which can only be comprehended by overcoming reductionist methodological approaches of the institutional mainstream.

Matching between students and universities: What are the sources of inequalities of access to higher education?

AbstractIt is assumed that a perfect balance between student academic achievement and the quality of the university they attend is beneficial both for students and higher education institutions (HEIs). Matching theory predicts the existence of perfect match between the two groups in the absence of transaction costs associated with university enrolment. However, in this study we show cases of mismatch situations in Russia under the Unified State Exam—the standardised student admission mechanism. The reasons for minimal transaction costs and the emergence of unequal access to HEIs were studied. Based on data on Moscow high school graduates who entered university, the determinants of the mismatch between the quality of universities and applicant abilities were assessed. Whilst overall favourable matching results are established, we show that individual student achievement results are subject to the influence of school and family characteristics. Thus, inequality of access can be formed at stages preceding higher education enrolment.

Participants’ interaction with sharing economy platforms in Russia

PurposeThe objective of this contribution is to pinpoint the practices of users' interactions with sharing economy platforms in Russia, as well as explore the source of motivation to use such platforms on the three cases of sharing economy platforms in Russia: Darudar [Gift-to-gift] (sharing goods), Bank Vremeny [Timebank] (sharing time and services) and Couchsurfing (sharing accommodation and leisure).Design/methodology/approachEmpirical data were gathered from 25 in-depth interviews conducted for active users of the platforms and ethnographic observations of users' offline meetings as well as digital observations.FindingsThe results reveal that participants of the platforms tend to establish their own rules and norms of interaction, thus, fostering social connection. Findings suggest that users of sharing economy platforms are driven by the potential of minimising transaction costs and intrinsic motivation, such as getting experiences which have no market alternatives, upcycling and disposal of belongings, self-promotion and self-realisation.Original/valueIn this study, sharing as based in the sharing economy is conceptualised as a separate principle of resource allocation. The theory was applied to the empirical material of three Russian platforms, which has not been done previously in the paradigm of sharing. The current literature on the sharing economy is largely switched to the for-profit North American platforms, while case studies from other settings are lacking. This article aims to fill this gap by providing insights into non-profit platforms' operation in Russia.

The development of vegetable enterprises in the presence of transaction costs among farmers in Omusati Region of Namibia: An assessment

The paper investigates how transaction characteristics influence the development of vegetable enterprises among smallholder farmers in north-central Namibia. As transaction costs are difficult to measure the theoretical framework of analysis is based on transaction costs economics of new institutional economics. The results revealed that the spot market-based governance structure was the most preferred market arrangements by smallholders farmers in north-central Namibia because vegetable farmers struggle to meet the quality and quantity standards as required by the contractors market-based and commission market-based arrangements. The results also suggest that due to incomplete information, farmers and market agents suffer from high transaction costs. Skewed information distribution between farmers and marketing agents leads to slow development of vegetable enterprises. The study recommends that information shared to farmers must be packaged in an adequate manner to minimise transaction costs in the vegetable value chain.

Monetary Policy and Domestic Investment in Nigeria: The Role of the Inflation Rate

Abstract Economic theory suggests that monetary policy can be used to stabilize an economy. However, the ability of monetary policy targets—interest rates and money supply—to stabilize an economy depends on their ability to achieve price stability. Using data from 1981 to 2018 and applying the vector error correction model, this paper seeks to determine how the changes in the inflation rate affect the ability of monetary policy tools to stabilize the Nigerian economy and stimulate investment. Empirical results suggest that the impact of the interest rates on investment depends on the level of the inflation rate. The size of the effect of interest rates on investment gets weaker as the inflation rate increases suggesting that monetary policy tools, such as the monetary policy rate (MPR), that directly change the interest rates are robust stabilization tools during periods of declining inflation rates but not relevant during periods of rising inflation rates. This is attributable to low bank lending rates. Additionally, the impact of the money supply target on investment does not depend on the level of the inflation rate. This suggests that monetary policy tools, such as open market operations, that directly change the money supply can be relevant stabilization tools during economic booms and recessions. As a result, the Central Bank of Nigeria should work to deepen the scale, capacity, and efficiency of its open market operations by ensuring that most of the people can participate with minimal transaction cost and by making different financial instruments available.

Theoretical Causes of the Problem of External Effects

The theoretical leakage of external effects in economic theory is revealed. The external effect is manifested in the form of material costs of third parties that are not directly involved in the business transaction, that is, where the activities of individual entities negatively (or positively) affect the activities of other entities that are not with them in market relations. The idea behind the study is that the theory of external effects is based on the views of scientists who have formed under the influence of the institutional environment from which they came. It is revealed that the pluralism of British society, originating from the institutional environment of the country, became a prerequisite for the formation of two antagonistic theories of leveling external effects – the theory of A. Pigou and R. Coase. According to A. Pigou theory, external effects are derived from unregulated markets. Based on the fact that external effects are derivatives of the free market (which defends neoclassicism), which make it impossible to maximize production efficiency (according to the marginalization theory), A. Pigou concludes that the state should take measures to overcome them. R. Coase held the opposite view, since the quintessence of his theory was transaction costs. According to R. Coase, such costs are much higher in terms of government regulation of economic activity than in direct contact with economic entities. That is, mediating actions of the state (redistribution of a resource and a product between subjects), costs society more expensive, than the direct agreement between subjects. It follows that, as a whole, it is more profitable for society to solve the problem of external effects at the producer and recipient level than to rely on the issue on the state. Analyzing the theories of external effects, it is found that A. Pigou considered social welfare in a qualitative dimension, while R. Coase quantified. It is established that the basis of A. Pigou theory is based on the principle of marginal utility, according to which, moving the product from wealthy to less wealthy citizens should maximize the quality of life of society as a whole; R. Coase, in his turn, interpreted social well-being as the aggregate of individual material gains that citizens had to grow by minimizing transaction costs. It was found that each of the researchers initially inferred the problem of external effects from their own ideas about well-being, and therefore their theories were mixed.

Динаміка демократизації в Чеській Республіці: між дивергенцією та конвергенцією

The paper studies the democratization dynamics in the Czech Republic in the context of interrelations between the power and the opposition. For modeling of the democratization process, we have applied the basic principle of synergetics – the principle of subordination. The interdependence of the democratization state and its parameters has been established. For the trend dynamics of democratization of the state political system, reproduced with the help of indicators in a modeled form, periods of fluctuation and its main phases – divergence and convergence are typical. It has been established that parliamentary elections are typical fluctuation points. They provide agents with the possibility to legitimately implement the election strategy and to change the vector of democratization in a constitutional way, to determine the short- or long-term implementation of the strategy of the ruling party or its leader, which, under conditions of greater total social capital helps either deterrence or stratification forces in their coming to power, triggering the dissipative democratization of the political system. Based on the analysis of the democratization trend, we have identified the defining points that recorded the stoppage of democratization and its entry into the fluctuation phase. This state of the system has been defined as the result of achieving a certain balance between the power and the opposition, as the prolongation of the established rules of the game, according to which the parties bore minimal transaction costs, reducing thus inter-party competition and institutional stability. It has been proved that after a certain stabilization, comes the stage at which the level of democracy of the political system reduces to a new saturation point (convergence). The study has revealed an unfinished cycle of fluctuation, which had manifested itself in the trend towards the convergence of democratization of the political system of the Czech Republic. Based on the analysis of indicators and modern political processes in the country, it has been found that democratization took place against the background of the permanent formation and preservation of two opposite poles in the political field.

Economic Integration of Aircraft Building Enterprises in the Context of the Transactional Approach

The theoretical concept of the study of economic integration within the framework of the neo-institutional paradigm is developed. The structure of the transaction costs of a corporation according to the sequence in which they arise during the implementation of transactions is substantiated. The drivers of the integrative development of modern aircraft building enterprises are studied and the content-related basics of their economic integration are formulated. Besides, the necessity of the formation of a mechanism for optimization of transaction costs of economic integration in the context of the transactional approach in the creation of an aircraft building holding company is substantiated. Distinctive and characteristic features of the functioning of aircraft production as a single complex of R&D and batch production that affect transaction costs are singled out and a typology of transaction costs of aircraft building corporations is proposed. A methodical approach to minimizing transaction costs in the creation of an aircraft building holding company is proposed based on the thesis that rational economic integration of aircraft building enterprises is carried out by changing the ownership relations and the transaction system within the framework of the creation of a holding type aircraft building corporation.

The Anatomy of Trading Algorithms

We study the anatomy of four widely used institutional trading algorithms representing $675 billion in demand from 961 institutions. Parent orders generate hundreds of child orders which strategically employ price, time-in-force, and display priority rules to navigate the tradeoff between trading and minimizing transaction costs. Child orders incur price impact at the time they are submitted regardless of whether or not they are filled, and even when passively priced. Child orders are grouped in strategic runs that oscillate between the aggressive or passive side of the spread. Child-level price, time-in-force, and display choices aggregate up to parent-level trading costs.

“Você não tem o controle”: a Lei Complementar 157/2016 e a Netflix no Brasil

Os objetivos deste estudo são debater a constitucionalidade da Lei Complementar 157/2016 e examinar seus possíveis impactos para a Netflix no Brasil. O argumento central aponta que a Lei é inconstitucional, pois, já que o streaming é um mecanismo de distribuição de dados por meio de pacotes, as informações distribuídas não são armazenadas pelo usuário que recebe a mídia a ser reproduzida. Nesse sentido, ele não configura um serviço enquanto obrigação de fazer de natureza física ou intelectual. De acordo com a Constituição brasileira, os municípios somente teriam o direito de instituir ISS sobre prestações de serviços que caracterizem obrigações de fazer. A sanção da Lei Complementar 157/2016 pode ser prejudicial para a Netflix, haja vista que a empresa trouxe a possibilidade de novos serviços com base na mídia digital e impactou a distribuição – ampliando o acesso global e minimizando custos de transação – e o consumo de bens culturais e criativos no setor audiovisual. Com a possibilidade de que os serviços de streaming se tornem mais caros e menos acessíveis – uma vez que a cobrança do ISS sobre a empresa pode acabar aumentando os preços do serviço oferecido por ela para seus clientes –, o consumidor brasileiro pode limitar sua busca por bens e serviços criativos a partir dessas novas formas de distribuição de dados.

Electronic Public Procurement: Process and Cybersecurity Issues

Abstract E-public procurement has a great potential to improve public procurement processes. It helps to increase competitiveness, and the use of digital technologies also minimizes transaction costs for business, increases trust and the transparency of decisions made by public customers. The goal of this case study is to analyze the functionalities of the Kazakh e-procurement web portal EPP, to evaluate them in a national and comparative perspective and to propose recommendations with a focus on selected process issues and its cybersecurity in the condition of digital transformation of the Republic of Kazakhstan. The analysis of functionalities of EPP from planning to execution of the contract allows it to propose important changes with the potential to increase competitiveness and decrease transaction costs of procurement in the country. The specific focus is on cybersecurity and proposals how to increase it.

Market Liquidity and Stock Return in the Nigerian Stock Exchange Market

This research examined the effect of market liquidity, inflation, and exchange rates on stock return in Nigerian Stock Exchange market. The researchers used ex-post facto design and employed secondary data subjected to Auto-regressive Distributive Lag (ARDL) bound test method of analysis within the period of twenty-one years. Findings reveal that in the short run, stock turnover, trading volume, exchange, and inflation rates have affected stock return positively and significantly. In the long run, market turnover has a positive effect. However, inflation and exchange rates have affected stock return negatively and significantly. Then, trading volume has a negative but insignificant effect on stock return, which is all at 5% level of significance. The researchers conclude that market liquidity, exchange, and inflation rates affect stock return. Therefore, the researchers recommend demutualization and transparent structures and adaptive method stabilization in exchange rate policies to increase stock market patronage, minimize transaction costs, and mitigate the market uncertainties.

Wellbeing assessment yardstick

Although Russia manifests some dynamics in its national policy on ageing, it still lacks comprehensive tools for the older generation wellbeing assessment both on national and regional levels. This research work is an ongoing project aimed at the development of the composite index (composite indicator) to assess the elderly population wellbeing in Russia for cross-regional comparison to equip Russian policy-makers with an essential tool and relevant reliable data to facilitate the decision-making and policy design at national, regional and local levels. The paper discusses the possibility of selecting relevant data from the pool of the official state statistics indicators to assess the elderly generation's wellbeing in 85 regions of the Russian Federation by four index domains (economic, social, health and regional environment dimensions). Due to a high geographical and territorial heterogeneity, this index can be advised to be adopted as a potential tool to monitor wellbeing across Russian regions with the focus on policy development for macro-regions. This grouping of regions can minimize transaction costs of bargaining on behalf of the 85 regions while developing national policies and strategies. The paper employs the Russian Elderly Wellbeing Index (REWI) to compare calculation results for 2014 and 2016 as well as addresses the issue of elderly population wellbeing analysis on the meso level in the context of federal districts. The authors run cluster analysis for the REWI indicators to compare clusters of Russian regions and federal districts.

Transaction Costs and Efficiency in Design-Build Contracting: Empirical Evidence from the Transportation Infrastructure Sector in Oregon

Design-build (DB) contracting as a type of public–private partnerships (PPPs) has been widely used as an alternative to the traditional contracting-out and the in-house provisions for the delivery of infrastructure in the United States. The research question this article seeks to answer is whether the efficiency motive helps explain the use of DB contracting compared to traditional contracting-out, the design-bid-build (DBB), in public infrastructure delivery. By using the transaction cost economics approach, I assessed whether DB contracting is selected to minimize transaction costs in certain infrastructure transactions that would later lead to more efficient results for those infrastructure transactions. By employing a two-stage empirical strategy (the nonparametric data envelopment analysis and the instrumental variable two-stage least squares regression approach), I examined 59 bridge and combination bridge-roadway projects in Oregon that were completed during 2005–2015 using both DB and DBB contracting. I found that when the transaction is complex, the assets in the transaction are specific, and the size of the transaction is large, the use of DB contracting significantly increases the efficiency score by 46 percentage points. The findings suggest that the transaction costs economizing motive underlies the choice of governance structure in public service deliveries.

Integration of digital technologies as a factor of post-industrial development

Digitization of economic sectors is contributing to economic efficiency growth.In the coming decades, many sectors of economy will undergo fundamental transformations such as: change of business models, change of business leaders, disruptive innovation etc. At that, like in previous industrial revolutions, changes and sequences in social, economic and geopolitical spheres will be most drastic. Modern digital economy identifies digital platform-based technologies intended to automate business-processes, minimize transaction costs, speed up assets turnover, facilitate development of competition, shaping of new professional standards and common information environment as top-priority issues.