transaction cost theory

Question 1

transactions

Answer 1

economic exchange

Question 2

power of the free market

Answer 2

coordination of production and exchange of goods through prices

Question 3

why do org exist

Answer 3

because market is not free

Question 4

kinds of transactioncosts

Answer 4

search, contracting, monitoring, enforcing

Question 5

unit of analysis tct

Answer 5

economic transactions

Question 6

HOW TCT

Answer 6

uncertainty, frequency, asset specificity -> choice of governance structure

Question 7

behavioral assumptions

Answer 7

bounded rationality and opportunism

Question 8

governance structures

Answer 8

institutional arrangement that coordinates and controls economic transactions between actors

Question 9

governance structure types

Answer 9

market, hybrid, hierarchy

Question 10

market

Answer 10

autonomous parties exchange are governed by prices in supply and demand equilibrium

Question 11

hybrid

Answer 11

longterm contractual relations that preserve autonomy but provided added transaction specific safeguards as compared with the market

Question 12

hierarchy

Answer 12

transaction among parties occur under a unified owner, who settles disputes by administrative fiat

Question 13

asset specificity

Answer 13

possibilities of alternative use of investments

Question 14

asset specificity types

Answer 14

site specificity, physical asset specificity, human assetspecificity, dedicated asset specificity

Question 15

higher uncertainty and asset specificity

Answer 15

higher hierachical governance structure

Question 16

TCT

Answer 16

organizational factors attempt to maximize the profit of interdependence by assigning transactions to governance structures in a discriminating way

Question 17

bounded rationality

Answer 17

not all the info is available

Question 18

opportunism

Answer 18

seeking self interest

Question 19

site specificity

Answer 19

competitors located next to each other

Question 20

physical assetspecificity

Answer 20

truck

Question 21

human assetspecificity

Answer 21

manager with knowledge how to deal with a client

Question 22

dedicated assetspecificity

Answer 22

software programme for communication

Question 23

temporal dedicated assetspecificity

Answer 23

need to deliver in time or lose value

Question 24

procedural dedicated assetspecificity

Answer 24

work flows are customized to transaction

Question 25

primary uncertainty

Answer 25

lack of knowlegde about potential states of nature

Question 26

secondary uncertainty

Answer 26

actions of others

Question 27

behavioral uncertainty

Answer 27

inability to predict opportunistic actions of others

Question 28

information asymmetry

Answer 28

all parties do not have same information

Question 29

appropriability

Answer 29

degree to which an economic actor can protects its knowledge from leakage to other parties

Question 30

higher frequency

Answer 30

overhead costs are lower, hierachical governance higher

Question 31

relational governance

Answer 31

ongoing recurrent transactions more than only economic relation