Glamor Economics

Chapter 52

Chapter 7 Section 6 How much does it cost to complete a transaction - transaction costs

In "Han Feizi", there is a story about "Zheng people buy shoes".

There was a man from the state of Zheng who wanted to go to the market to buy shoes.I measured my feet at home in the morning and put the measured size on the seat.At the market, when he picked up the shoes, he realized that he had forgotten the size, so he said to the shoe seller, "I forgot to bring the measured size." Then he went home to get the measured size.When he returned to the bazaar, the bazaar had already dispersed, and he did not buy any shoes in the end.Someone asked him, "Why don't you try on shoes with your own feet?" He said, "I'd rather trust the measured size than my own feet."

The fable of Zhengren buying shoes is intended to satirize those who are stubborn, stick to dogma, do not know how to adapt, and do not know how to take flexible countermeasures based on objective reality.Judging from the result of Mr. Zheng buying shoes, he went back and forth between the market and his home twice, wasting a lot of time and energy, and finally did not buy shoes.In terms of economics, his transaction costs are simply too high.

Transaction costs, also known as transaction costs, were first proposed by the American economist Ronald?Coase proposed.In his article "The Nature of the Enterprise", he believed that transaction costs are generated through the organization of the price mechanism. The most obvious costs are all the costs of discovering relative prices, the costs of negotiating and signing each transaction that occurs in the market, and the use of price mechanisms. other aspects of the mechanism's existence.

The proposal of transaction cost is of great significance.Economics studies the allocation of scarce resources, and transaction cost theory shows that transaction activities are also scarce.The uncertainty of the market makes the transaction risky, so it is said that the transaction activity has a price, so there is a question of how to configure the transaction activity.So far, the problem of resource allocation has become a problem of economic efficiency.Whether it is an internal transaction of an enterprise or a market transaction, there are different transaction costs.However, when we buy goods, we often ignore the transaction costs of purchasing goods.

The academia generally recognizes that transaction costs can be divided into broad transaction costs and narrow transaction costs.Transaction costs in a broad sense refer to the tangible and intangible costs required to achieve transactions in order to break through all obstacles.Transaction costs in a narrow sense refer to market transaction costs, that is, exogenous transaction costs, including search costs, negotiation costs, and performance costs.

In general, transaction costs can be distinguished as follows:

1.Search costs.To collect product information and transaction object information, to find what you need in a wide variety of product categories, you must spend a certain amount of time or energy, which is the search cost.

2.information cost.The cost of obtaining transaction object information and exchanging information with the transaction object is the information cost.

3.Negotiation costs.The cost of bargaining for contracts, prices, and quality.

4.decision cost.That is, the internal costs required to make relevant decisions and sign contracts.

5.default costs.After the transaction occurs, a certain cost will also be paid when the contract is breached.

[links to related words]

Transaction cost (also known as transaction cost) is an economic concept, which refers to various transaction-related costs incurred by both parties before and after buying and selling when a transaction is completed.

The search cost includes the cost of finding the most suitable transaction object and the cost of finding the transaction object.

Agreement cost refers to the cost of negotiation and negotiation between the two parties to eliminate differences.

Contracting Costs The cost involved in signing a contract when both parties reach a consensus to conduct a transaction.

Supervision cost refers to the cost of supervising whether the other party implements the contract after the contract is signed.

Cost of breach of contract refers to the cost that the other party spends to motivate the performance of the contract when one party breaches the contract after the contract is signed.

(End of this chapter)