Institutional Economics at the Micro Level? What Transaction Costs Theory Could Listen From Original Institutionalism (In the Spirit of Building Bridges)
AbstractInertia in academia sometimes obstructs the development of important insights. That is one reason for the specially long gap separating Coase's seminal paper  that laid the foundations of current Transaction Cost Economics (TCE) and the efforts of scholars to develop his ideas. But as TCE evolved and merged with the name of Oliver Williamson, it has absorbed a tension 'between an intuitive commitment to realism...and his commitment to some core presumptions of mainstream economics' [Hodgson 1998]. Most TCE scholars seem to rely on the latter commitment, and this could mean losing a chance of enriching economics in its methodological and theoretical foundations. This paper regroups and comments criticisms from 'Original' Institutional Economics (OIE) to TCE in the spirit of building bridges on: i) discrepancies among TCE’s and Commons’ concepts of transaction; ii) TCE’s use of efficiency as a status quo rationalization; iii) the static analysis that ignores institutional feed-backs; iv) the assumption of opportunism; and v) the incompatibility of bounded rationality and optimizing behavior.
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Bibliographic InfoPaper provided by EconWPA in its series Industrial Organization with number 0511006.
Length: 11 pages
Date of creation: 14 Nov 2005
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Transaction cost economics; institutional economics; Oliver Williamson; new institutional economics; institutionalism; transaction costs; theories of the firm; economic organisation;
Other versions of this item:
- Huascar Pessali & Ramon Fernandez, 2005. "Institutional Economics at the Micro Level? What Transaction Costs Theory Could Listen From Original Institutionalism (In the Spirit of Building Bridges)," Method and Hist of Econ Thought 0511001, EconWPA.
- L - Industrial Organization
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-11-19 (All new papers)
- NEP-HIS-2005-11-19 (Business, Economic & Financial History)
- NEP-HPE-2005-11-19 (History & Philosophy of Economics)
- NEP-PKE-2005-11-19 (Post Keynesian Economics)
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