Transaction Costs Research Articles

The impact of rural e‐commerce platforms on the transformation of industrial structure: Evidence from China

AbstractThe rapid development of rural e‐commerce in China has caught the attention of economists around the world. Through incorporating rural e‐commerce platform into the general equilibrium model, this paper theoretically analyzes the impacts of rural e‐commerce platform on industrial structure and the potential mechanisms. Then, taking the exogenous policy of Comprehensive Demonstration of National E‐commerce into Rural Areas in China as a quasi‐experiment, this paper constructs a staggered difference‐in‐differences model to empirically examine how rural e‐commerce platforms affect the output proportion of nonagricultural sector with samples of 2305 counties in China from 2009 to 2019. The findings indicate that the construction of rural e‐commerce platform promotes the transformation of industrial structure through technological advances and reduction of transaction costs.

Impact of Concepts and Spatial Scales on Irrigation Efficiency for Sustainable Water Resources Management: A Review

This paper provides a review of different ‘irrigation efficiency’ concepts evolved over the time since the term was originally conceived, from an engineering perspective; the impact of scale, i.e., from field to basin, on savings in water demands through hightech irrigation—the efficiency paradox; the role of rice cultivation—water guzzler or recharge basin; and policies for transforming high-tech irrigation into water-conserving interventions. As these issues are interlinked, their synergetic resolution is necessary for establishing sustainable irrigated-agriculture at basin scale. There is a consensus on the utility of classical irrigation for designing the capacity of different components of an irrigation system; and also appreciation of the fact that it does not represent the true picture of water savings/losses at the basin scale. Consumed fraction-based water accounting makes a better representation of irrigation performance from field to basin scales. In literature, studies from different countries revealed the positive impact of hightech irrigation in improving land productivity and income at the field scale but without any significant water conservation for further use to other sectors/locations. Many studies also indicate that introduction of high-tech irrigation in water-scarce but abundant irrigable land regions led to increased water use, which resulted in further decline of water table and/or deterioration of groundwater quality. The increase in water demand on improving irrigation efficiency is known as the efficiency paradox or rebound effect. In water-scarce areas, high-tech irrigation should be promoted with caps on water withdrawals even if the water transfer to downstream areas or other uses is not required. High-tech irrigation is helpful in reducing transaction costs for achieving water conservation, but gold plating of irrigation infrastructure alone would not be sufficient. This study emphasizes on enactment and enforcement of policies for regulating total water withdrawal, limiting irrigated area, and adopting ecologically-compliant cropping patterns for establishing sustainable irrigated-agriculture without the rebound effect.

Replacing artisanal fisheries with dolphin watching: Strategy for conservation and sustainable community‐based marine ecotourism

Abstract In coastal delphinid conservation, dolphin watching (DW) is frequently proposed for artisanal fishers as a community‐based marine ecotourism (CBME) plan to reduce fishing effort and delphinid bycatch. Questions including whether DW profitability is sufficient to replace fishing and whether fishers can conduct DW sustainably, however, are rarely examined. In the present study, questionnaire targeting tourists was implemented to investigate DW profitability in Sanniang Bay, China where DW‐based CBME has been operated by local fishers since 2004. CBME sustainability was evaluated by comparing DW profitability with household income with reference to local poverty, and rural and economically comfortable families in China. Out of 1046 tourists interviewed, 40 (3.82%) tourists knew there is DW in Sanniang Bay, while 292 (27.9%) tourists were lured to attend DW with low pricing. The fisher earned 110RMB (ca. 16.0$USD) per DW trip and required two, four, and nine trips per day to earn household income higher than poverty, rural and economically comfortable lines. Raising ticket fee and maximizing per‐trip number of tourists can substantially improve DW profitability, which facilitates CBME sustainability and poses minimal impacts on target animals. CBME in rural areas could be trapped into low popularity–low pricing–low profitability embarrassments because of primitive tour facilities, insufficient ecological education value, poor hospitality skills and lacking marketing access. The sustainable CBME should incorporate ecologically friendly conducts, direct indigenous profits with minimal transaction costs, venture and service diversification, and marketing with indigenous cultural characteristics. DW history in Sanniang Bay further indicates profit distribution of tourism ventures directly influence CBME sustainability. Accordingly, indigenous rights, economic equity and social justice should be centrally placed in CBME policying with the minimal intervention from non‐indigenous capitals and commercialized manipulations.

The diversification benefits of cryptocurrency factor portfolios: Are they there?

AbstractWe investigate the out-of-sample diversification benefits of cryptocurrencies from a generalised perspective, a cryptocurrency-factor level, with traditional and machine-learning-enhanced asset allocation strategies. The cryptocurrency factor portfolios are formed in an analogous way to equity anomalies by using more than 2000 cryptocurrencies. The findings indicate that a stock–bond portfolio incorporating size- and momentum-based cryptocurrency factors can achieve statistically significant out-of-sample diversification benefits for investors with different risk preferences. Additionally, machine-learning-enhanced asset allocation strategies can boost the traditional approaches by enriching (shrinking) the distributions of weights allocated to potentially effective cryptocurrency factors. Our findings are robust to (i) the inclusion of transaction costs, (ii) an alternative benchmark portfolio, and (iii) a rolling-window estimation scheme.

Factors Influencing Smallholder Bean Producer’s Participation in Collective Marketing in Kawambwa, Luwingu and Senga Hill Districts of Zambia

Commercialization of agricultural produce through cooperatives that undertake collective marketing can decrease transactions costs for smallholder farmers. This study investigated the factors influencing smallholder bean producers’ decision to participate and intensity of participation in collective marketing in Kawambwa, Luwingu and Senga Hill districts of Zambia. A multi-stage sampling design was used to draw 150 smallholder farmers from cooperatives from the three districts. Cross sectional data were collected through semi structured questionnaire and in-depth focused group discussions were also conducted with the three cooperatives. Double hurdle results revealed that the decision to participate in collective marketing was influenced by age, gender, household size, farm size, output price, farm income, hybrid seed, access to market information, ownership of a bicycle, radio and mobile phone. On the other hand, the determinants of intensity of participation in collective marketing were education level of the household head, bean output and distance to the nearest market. To increase smallholder farmers’ participation in collective marketing, there is need to focus on policies that enhance access to market information, promotion and adoption of hybrid bean varieties, increased bean production and construction of bulking facilities in rural areas away from main markets. Smallholder farmers who have attained at least primary level education should be targeted as well as encourage youth and women participation.

Restricciones institucionales en la demanda de trabajo calificado en Chavimochic

The study analyzes the effect of institutional restrictions on the demand for qualified labor in Chavimochic. Institutional constraints include: regulatory quality, political stability, control of corruption, Free Trade Agreements, transaction costs, income differences and the minimum living wage. The data on the demand for qualified labor are obtained from agro-export companies established in Chavimochic, in a longitudinal and transversal period between the years 2002 to 2017. Through the regression analysis of panel-type data, it is found that regulatory quality, political stability, control of corruption, Free Trade Agreements and transaction costs have a positive and significant effect on the demand for qualified labor. On the other hand, the difference in income and the minimum living wage has a negative and significant effect. In conclusion, institutional restrictions do have an effect on the demand for qualified labor in Chavimochic.

Blockchain in banking: A comparative review of developments in the USA and Nigeria

This review paper systematically examines the adoption and impact of blockchain technology within the banking sectors of the United States of America (USA) and Nigeria, offering a comparative analysis of developments across these divergent economic and regulatory landscapes. Through an extensive literature review, the paper synthesizes findings from a range of sources, including peer-reviewed journals, industry reports, and case studies, to explore how blockchain technology is being integrated into banking operations, the challenges encountered, and the opportunities it presents in both contexts. The analysis reveals that in the USA, the integration of blockchain into banking has progressed significantly, supported by a mature technological infrastructure, a clear regulatory environment, and substantial investments in financial technology innovations. This has facilitated enhancements in transaction efficiency, security, and cost reductions. Conversely, Nigeria’s adoption of blockchain technology in banking is at a nascent stage, primarily focused on addressing financial inclusion and improving the efficiency of cross-border payments. Despite this, regulatory uncertainties and infrastructural deficits pose challenges to its broader adoption. The paper concludes that while blockchain technology offers the potential to transform banking operations globally, its adoption and impact are heavily influenced by specific national contexts. The study underscores the need for adaptive regulatory frameworks and infrastructure development to fully harness the benefits of blockchain in the banking sector. It advocates for further research into blockchain’s practical applications in banking, emphasizing the importance of cross-country studies to understand its global implications.

Smart Contract and IPFS Decentralized Storage for Halal Certification Process

The halal industry today has achieved rapid development. Halal product is mandatory for Muslims and a big business for Indonesia. For others, it affirms the product's quality assurance and becomes a trending lifestyle. The product owner must submit an application and undergo several processes to obtain a halal certificate. However, there are challenges in the certification process and documentation. The proposed system automates the flow between certification processes through digital signing and stores the certificate and fatwa file. The study investigates the utilization of blockchain to manage the process and the integration of decentralized storage (IPFS) to store the digital version of the fatwa and certificate. A smart contract is designed and deployed on the Ethereum blockchain, and the transaction time and cost are analyzed. A smart contract enforces that certain actions are executed once the required conditions are fulfilled. The proposed system would cost 24.6 USD and require 227 seconds on average for the system setup. Each submission requires 9.86 USD and takes 92 seconds on average. Verification is free, and the average result can be obtained in one second. The appointed officer sets each entity to interact with the contract, and the digital documents (fatwa and certificate) are available online using IPFS. Progress of the certification is transparent to the public, increasing the public's trust. The study demonstrates a smart contract's capability to manage a product's certification process.

Transformation of the Forestry Partnership in the Java Forest: A Study of Community Institutions Lancar Jaya after the Designation of Forest Areas with Special Management

The Forest Village Community Institution (LMDH Lancar Jaya) is formed to carry out forestry partnerships in forest areas managed by Perum Perhutani. Along with the designation of this forest area as Forest Areas with Special Management (KHDPK), this institution and its forestry partnerships must be transformed. This study analyzes the timeline and performance of forest village community institutions to describe potential factors for the readiness of partnership transformation. Two theoretical approaches were used in this research: Situation-Structure-Behavior-Performance developed by Schmid (1987; 2004) and Jones’ organizational capacity to produce value (Jones, 2013). The method used was qualitative descriptive, timeline, and content analyses. Research data and information were collected through in-depth interviews and document analysis. This study concludes that the performance of LMDH Lancar Jaya is efficient as an independent and active institution. This performance is driven by significant capital. Good social capital is a strong network of trust in management, solid stakeholder relationships, the ability to choose institutional alternatives that suit their characteristics, minimal transaction costs, and the ability to provide market certainty with interlock transactions. This article recommends the necessary conditions for the transformation of a legal business entity by maximizing inputs for investment capacity in the form of capital, raw materials, human resources, business knowledge, and customers, which is supported by input conversion, administrative fulfillment, and cooperative facilitation of transformation.

Governance of the circular economy in the canned fish industry: A case study from Spain

Spain is the leading country in production, 305,403 tons in 2022, of canned fish in Europe. Part of its success is because this industry is one of the leading sectors in innovation and technology transfer within the agri-food chain in Spain. At the beginning of the 21st century, its research center created a line of product valorization, the seed of current research on circular economy. This article aims to analyze, from the New Institutional Economics (NIE) approach, the process of institutional change and the evolution of the Spanish canned fish sector. The evolution of the legal framework, as well as the internal organization of the sector and its strategies, have modified the governance relationships, altering the incentives and transaction costs of the industry actors. The results show the existence of two distinct stages, 2007–2015 and 2016–2022. In the first stage, most of the research projects were regional in nature and institutional relations were more limited. In the second stage, the creation of a solid legal framework together with the inauguration of a new research center, the incorporation of new equipment, the increase in the number of partners and the increase in relations with agents in the sector reinforced the implementation of the circular economy in the canning industry. In both periods, the high degree of associationism in the Spanish canned fish industry is key to creating economies of scale, increasing public and private collaborations and participating in research projects.

Asymmetric trade costs, domestic value chains and global value chains in China: mechanism and effect assessment

Previous research mostly evaluates global value chain embeddedness at the country level rather than considering the expansions of global value chains at the regional level within a country, and pays little attention to the mechanism linking global value chains and domestic value chains. Therefore, a substantial part of the variation in global value chain embeddedness at the regional level remains unexplained. Using Chinese interregional input-output tables in 2002, 2007, 2010, and 2012, this study investigates the impact of the asymmetric trade cost on global value chain embeddedness in China, and the underlying interaction mechanisms between domestic value chains and global value chains. The findings show that the asymmetric trade cost may widen the gap in the degree of global value chain embeddedness between bilateral trade regions, which unveils the variation in global value chain embeddedness at the regional level from the perspective of the asymmetric trade cost. Furthermore, domestic value chains may promote global value chains through improving collaboration, reducing transaction costs, and enhancing industrial competitiveness. In closing, this study reveals that the exacerbating effect of asymmetric trade costs on the disparity in global value chain embeddedness among regions becomes more pronounced in the presence of a significant gap in domestic value chain integration.

Determinants of microfinance credit uptake and the amount of credit by smallholder dairy cattle farmers in Maara sub-county, Tharaka Nithi County, Kenya

Microfinance institutions play a crucial role in enhancing the production and productivity of smallholder farmers by providing them with the necessary financial resources. However, the adoption and utilization of microfinance credit in the Maara sub-county fall short of their potential benefits. Despite various credit service providers, not all smallholder dairy cattle farmers in this region have been able to capitalize on these services. Several factors contribute to the low uptake of microfinance credit among smallholder dairy farmers, including inadequate financial literacy, absence of collateral, high transaction costs, and insufficient infrastructure. Acknowledging that these factors are dynamic and can vary across different regions is and essential. Therefore, a comprehensive understanding of the dynamics influencing microfinance credit adoption and utilization in the Maara sub-county is lacking. This study examined microfinance credit uptake from two angles: the factors affecting its adoption and the determinants of credit size once accessed. Recognizing the interdependence of these choices, the study employed the Heckman selection model. Results indicated that factors such as years of schooling, household size, organization membership, access to extension services, and collateral availability significantly (p < 0.01) influenced microfinance credit uptake. Furthermore, schooling years, household size, and daily milk production per cow emerged as the most impactful credit size determinants (p < 0.05). The study suggests that promoting organization membership among smallholder dairy cattle farmers could enhance access to microfinance credit facilities, thereby ensuring sustainable milk production. By addressing the identified factors, the Maara sub-county could unlock the potential of microfinance credit to benefit its agricultural sector.

The Impacts of Payment Schemes and Carbon Emission Policies on Replenishment and Pricing Decisions for Perishable Products in a Supply Chain

In the supplier–retailer–consumer system, the retailer’s replenishment and pricing strategies impact the entire transaction process, forming a comprehensive trading market. Suppliers offer advance-cash-credit payments to retailers, while retailers provide customers with cash-credit payment options. In the current health-conscious consumer market, purchasing decisions are influenced not only by commodity prices but also by the freshness of products, particularly perishable goods. Growing awareness of climate change and the advent of carbon emission policies have raised concerns about the environmental costs of business transactions. This study focuses on perishable products whose demand is influenced by both price and freshness. It explores the adoption of various payment methods by suppliers and retailers, as well as the impact of carbon emission cap-and-trade policies or carbon tax policies on management and pricing strategies. Suitable inventory models are established to determine the optimal replenishment and pricing strategies for maximizing the current value of total profit. We illustrate that the current value of total profit demonstrates joint concavity concerning both the selling price and the replenishment time. Finally, we verify the proposed models using numerical examples and present the findings of sensitivity analyses. The findings of this study yield several valuable insights for inventory management of perishable goods.

Does Remittance Inflow and Foreign Direct Investment Spur Economic Development in Developing Countries? Insights from Nigeria

Given the rising inflows of remittance and foreign direct investment into developing countries, the study examined their importance on economic development in Nigeria using the ordinary least squares method and time series data collected from secondary sources, and the Error correction models (ECM) were estimated. Findings showed that remittances and foreign direct investment impacted positively and significantly on economic development and the exchange rate negatively influenced economic development. Thus, recommended that the government should remove strict transaction costs of remitting money to expand the overall inflow of remittances and more personal remittances should be encouraged for investment in human capital development. Additionally, improvement in the investment climate for existing and expected foreign investors, relaxation of the strict laws on profit repatriation, and the improvement in the macroeconomic environment by curbing security challenges, social unrest, and corruption will encourage foreign investors to increase their investments. It also recommends that the government take advantage of these inflows to stabilize the volatility of the exchange of the domestic currency.

EXPRESS: Exploring the Development of Heterogeneous Contracting Capabilities: The Role of Organizational Design

Previous research on learning to contract and contracting capabilities suggests that firms in interorganizational relationships adopt contractual designs that economize on transaction costs, and over time learn to govern their relationships in a more efficient manner by incrementally aligning contractual terms with transaction attributes based on new experiences made in their relationships. We augment the learning to contract literature by highlighting the role of organizational design as a factor that may impact contractual learning and the development of heterogeneous contracting capabilities. Specifically, we suggest that the level of specialization and structural integration across the firm’s technical, commercial, and legal functions may affect the effectiveness of contractual learning and the type of learning likely to occur. We also outline boundary conditions for our model in terms of potential interactions between the contractual environment, organizational design, and contractual learning.

An Efficient and Scalable Framework for Decentralized Finance Application Using Blockchain Interoperability

In recent years, blockchain technology has drawn a lot of attention, especially in the field of decentralised finance (De-Fi). However, scalability problems have come to light as a significant obstacle to the broad use of blockchain-based applications. To solve the issue of scalability, this paper has created a decentralised finance application with three main components: the addition of more liquidity to the swapping application, the implementation of a Polygon Proof of Stake bridge to enable efficient asset transfers, and the ability to transfer tokens between accounts seamlessly regardless of network agnosticism. The first feature, network agnostic capabilities for interoperability, facilitates token transfers between blockchain networks, allowing users to access and transact across them with ease The second component, the Polygon Proof-of-Stake bridge, makes asset transfers more efficient by taking advantage of the Polygon network's scalability advantages, which drastically lower transaction costs and processing times. Finally, adding more liquidity to the swapping programme makes it more scalable by guaranteeing that there is enough money for transactions, which prevents delays and bottlenecks. The scalability issue with blockchain technology is efficiently resolved by adding these three characteristics to the decentralised finance application, creating new opportunities for the mass acceptance and utilisation of blockchain-based financial services.

A Fuzzy Portfolio Model With Cardinality Constraints Based on Differential Evolution Algorithms

Uncertain information in the securities market exhibits fuzziness. In this article, expected returns and liquidity are considered as trapezoidal fuzzy numbers. The possibility mean and mean absolute deviation of expected returns represent the returns and risks of securities assets, while the possibility mean of expected turnover represents the liquidity of securities assets. Taking into account practical constraints such as cardinality and transaction costs, this article establishes a fuzzy portfolio model with cardinality constraints and solves it using the differential evolution algorithm. Finally, using fuzzy c-means clustering algorithm, 12 stocks are selected as empirical samples to provide numerical calculation examples. At the same time, fuzzy c-means clustering algorithm is used to cluster the stock yield data and analyse the stock data comprehensively and accurately, which provides a reference for establishing an effective portfolio.

The Introduction of an Electronic Bill of Lading into the Russian Legal Order. Part II

The paper analyzes the possibility of building a system of electronic bills of lading, the legal effect of which is determined under the norms of Russian legislation. The author highlights that the existing norms are not able to meet the needs of turnover and the fair distribution of risks of using electronic bills of lading. The paper elucidates the key factors determining the prospect of using an electronic bill of lading in trade. They include the rules ensuring neutrality and reliability of the person maintaining the register of electronic bills of lading, rules ensuring impossibility of foreclosing on an electronic bill of lading for the obligations of the person maintaining the register, the level of security of accounting for rights in relation to electronic bills of lading, the amount of transaction costs of participants in trade when using an electronic bill of lading, rules ensuring control of the pledgee over the transfer rights in relation to the pledged electronic bill of lading, convenience of transferring rights, as well as the possibility and consequences of converting an electronic bill of lading. Taking into account the above criteria, the author considers the possibility of regulating an electronic bill of lading on the basis of the corpus of norms already existing in Russian legislation, namely, using the model of non-documentary securities and digital rights. It is noted that none of these models can ensure the effective functioning of an electronic bill of lading in the absence of a whole range of legal and technological solutions, without which the expected advantages are outweighed by the problems of practical application. The paper elucidates possible ways of perspective regulation of electronic bills of lading in the Russian legal order and analyzes possible ways of civil law protection of the rights confirmed by the electronic bill of lading in the regulation of each of the proposed models.

An analysis of the market efficiency of the Chinese copper futures based on intertemporal and intermarket arbitrages

This paper studies the market efficiency and relevant issues of the copper futures traded on the Shanghai Futures Exchange (SHFE) in China. Since its listing, the market, grown unceasingly in scale and internationalization level, has become the largest copper futures trading market in the world (the London Metal Exchange (LME) copper futures market is the second largest). Using the data from 2006 to 2022 as a sample, a period covering the outbreak of the COVID-19 pandemic and the internationalization of the Chinese copper futures, this paper analyzes the market efficiency of China’s copper futures based on both intertemporal and intermarket strategies (SHFE Copper Futures and LME Copper Futures, with considering time difference factor). To better reflect the actual situation, this paper, when establishing trading strategy models, not only took into account various actual trading factors such as transaction costs, market impact costs, liquidity costs, margin, and capital costs but also combined daily and high-frequency data to present highly practical arbitrage strategies. According to empirical results, overall, it was not found significant arbitrage opportunities to violate the market efficiency rule. Although some arbitrage opportunities indeed emerged, they were infrequent, especially when transaction costs were considered. Specifically, in terms of the intertemporal strategy, despite that infrequent arbitrage opportunities did appear in the SHFE copper futures market, they failed to bring substantial gains, some of which even caused losses in extreme cases. In terms of the intermarket strategy, there is a cointegration relationship between the logarithmic price of LME copper futures and the logarithmic price of SHFE copper futures. The average annualized rates of return in the results of the in-sample empirical analysis were high, but in the out-of-sample empirical analysis of high frequency and daily data were not found significant arbitrage opportunities. The influence between the LME copper futures market and the SHFE copper futures market was bidirectional.

An Evaluation of the Effectiveness of Digital Financial Service (DFS) in Promoting Financial Inclusion (FI) among Low-Income Households

Financial inclusion, characterized by access and usage of formal financial services, is a critical driver of economic development and poverty reduction. In Nigeria, a country with a large population of unbanked and underbanked individuals, adoption of Digital Financial Services (DFS) presents a promising avenue for expanding financial inclusion among low- income households. This study focused on evaluating the effectiveness of DFS for promoting financial inclusion among low-income households in Jigawa State, North-West Nigeria. Using a mixed-methods research approach, this study comprehensively assessed the impact of DFS on financial inclusion indicators. The research draws from a representative sample of low- income households in Jigawa State, examining utilization of DFS platforms, perceptions of the benefits and challenges associated with these services. Findings indicate notable increase in financial inclusion among low-income households in Jigawa State following the introduction of DFS. Factors contributing to this positive trend include improved convenience, reduced transaction costs, and increased financial literacy. However, challenges related to digital literacy (complexity) and trust in digital platforms (perceived risk) persist and need to be addressed to maximize the impact of DFS. This research contributes to the ongoing discourse on financial inclusion and digital financial services by providing empirical insights specific to the Jigawa State context. The outcomes of this study are expected to inform policymakers, financial institutions, and DFS providers on strategies for further enhancing the reach and effectiveness of digital financial services in promoting financial inclusion among low-income households not only in Jigawa State but also in similar regions across Nigeria and beyond.