Varieties of Transaction Costs-Williamson & Schmid


S

Varieties of Trans. Cost

S (all could be grouped as market, adm., or status) P
INFORMATION COST

(quality measurement)

Consumer goods.

Labor







"Moral hazard"

(post contract)



"Adverse selection."

(Pre-contract)





INFORMATION COST

(predict the future)

State-contingent



Labels--voluntary or required

Product standards..........................

Brands

Million $ celebrity endorsements

Products liability

Rule of merchantability

Sell livestock by dressed carcass.

Cost plus contracts.

Kenyan coffee washing stations vs. Cameroon farmers washing......

Vickery Auctions.

"Instinct of workmanship...............

Grameen Banks.

Boundaries of insurance pools.

(Individual vs. area yield as basis for calculating claims.)

Contingent claims..........................



Consumer mistakes

If you can't afford the best medical care, you can't have any.











Coffee quality.



No shirking.

Less moral hazard.





Distribute costs of being wrong.

CONTRACTUAL

(Related to number of and access to parties.)

Reasonable use vs Prior Approp.

Damages vs. injunction.

Eminent domain.

Class action rights.



Who gets the rent?
ASSET SPECIFICITY

plus uncertainty

Necessarily incomplete contracts.

Hostages and integrated firms.

Plantations or small farms.

Require farmers to sell to processor who also is input supply.

Keiretsu.

Integrated bank loans--

Germany

U.S. Bank for Co-ops.

Labor paid by piecework, salary, putting-out, etc.

Cooperatives (loyal owners)

Status--learned guile

or forbearance.

High cost technology.

Low per unit cost tech.

(Economizing or power)



Less excess capacity from investment duplication.


 


Degree of shirking.

(more in Period 26 on Labor)


Degree of opportunism.

\810\tr-cost.htm Oct., 1996