Transaction Costs

Part of the The European Heritage in Economics and the Social Sciences book series (EHES, volume 8)


In neither in advanced economies, nor in developing countries are economic transactions without cost. But the lower these costs are, the more exchange is possible, and the greater are a society’s gains from trade and specialisation. It is well known since the early days of classical economics that a major cause for the wealth of nations is the ability of both countries and firms to exploit comparative advantages through specialisation and the division of labour. However, the division of labour requires that everyone can exchange his specialised output for other products. Although the importance of the exchange economy is well recognised, it has long been assumed to operate at no cost. Accordingly, economic development was conventionally attributed to changes in production factors and technology alone.


Transaction Cost Governance Structure Institutional Environment Institutional Arrangement Transaction Cost Economy 

Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.CologneGermany

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