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Transaction cost theory of the firm and community forestry enterprises

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  • Vega, Dora Carias
  • Keenan, Rodney J.

Abstract

The share of production and processing acquired by community forestry enterprises (CFEs) in the forest products and service industries has increased considerably in developing countries. This paper is a review article that analyzes the importance of both vertical integration and governance of economic activity for communities aiming to benefit from commercial forestry. Transaction cost economic theory serves as a basis for the analysis. Organizational forms, also known as governance structures, set order and provide for mutual gain in commercial exchanges between parties. One of the most important tasks of economic governance is to reduce transaction costs stemming from opportunistic behavior from one or both of the transacting parties. Governance structures exist in a continuum with the market and the firm at opposite ends of the spectrum. A ‘firm-type’ organization is only one possibility in a continuum of enterprise governance structures. The Mexican experience with CFEs corroborates the existence of a range of governance forms that exhibit some of the characteristics described by TCE theory. The paper reflects on the transaction cost implications of these governance structures for a range of vertical integration levels in Mexican CFEs.

Suggested Citation

  • Vega, Dora Carias & Keenan, Rodney J., 2014. "Transaction cost theory of the firm and community forestry enterprises," Forest Policy and Economics, Elsevier, vol. 42(C), pages 1-7.
    • Handle: RePEc:eee:forpol:v:42:y:2014:i:c:p:1-7
    DOI: 10.1016/j.forpol.2014.01.006
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    References listed on IDEAS

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    Cited by:

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    4. Torres-Rojo, Juan Manuel & Moreno-Sánchez, Rafael & Amador-Callejas, Joel, 2019. "Effect of capacity building in alleviating poverty and improving forest conservation in the communal forests of Mexico," World Development, Elsevier, vol. 121(C), pages 108-122.
    5. Gnych, Sophia & Lawry, Steven & McLain, Rebecca & Monterroso, Iliana & Adhikary, Anukram, 2020. "Is community tenure facilitating investment in the commons for inclusive and sustainable development?," Forest Policy and Economics, Elsevier, vol. 111(C).
    6. Carias Vega, Dora & Keenan, Rodney J., 2016. "Transaction costs and the organization of CFEs: Experiences from ejidos in Quintana Roo, Mexico," Forest Policy and Economics, Elsevier, vol. 70(C), pages 1-8.
    7. Trejos, Bernardo & Flores, Juan Carlos, 2021. "Influence of property rights on performance of community-based forest devolution policies in Honduras," Forest Policy and Economics, Elsevier, vol. 124(C).
    8. Berka, Anna L. & Harnmeijer, Jelte & Roberts, Deborah & Phimister, Euan & Msika, Joshua, 2017. "A comparative analysis of the costs of onshore wind energy: Is there a case for community-specific policy support?," Energy Policy, Elsevier, vol. 106(C), pages 394-403.
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    10. Mohammed BELAL UDDIN, 2017. "Evaluation Of Theoretical Paradigms Of Interfirm Relationship Formation," Management and Marketing Journal, University of Craiova, Faculty of Economics and Business Administration, vol. 0(1), pages 106-114, May.
    11. Kendisha Soekardjo Hintz & Jürgen Pretzsch, 2023. "Co‐creation of business models for smallholder forest farmers’ organizations: Lessons learned from rural Ethiopia and Tanzania," Annals of Public and Cooperative Economics, Wiley Blackwell, vol. 94(3), pages 921-949, September.
    12. Gelo, Dambala & Muchapondwa, Edwin & Koch, Steven F., 2016. "Decentralization, market integration and efficiency-equity trade-offs: Evidence from Joint Forest Management in Ethiopian villages," Journal of Forest Economics, Elsevier, vol. 22(C), pages 1-23.
    13. Scudder, Micah G. & Baynes, Jack & Applegate, Grahame & Herbohn, John, 2019. "Addressing small-scale forestry informal markets through forest policy revision: A case study in Papua New Guinea," Land Use Policy, Elsevier, vol. 88(C).
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    15. Nantongo, Mary & Vatn, Arild, 2019. "Estimating Transaction Costs of REDD+," Ecological Economics, Elsevier, vol. 156(C), pages 1-11.

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