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Transaction cost regulation

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  • Spiller, Pablo T.

Abstract

This paper discusses the fundamental underpinnings and some implications of transaction cost regulation (TCR), a framework to analyze the interaction between governments and investors fundamentally, but not exclusively, in utility industries. TCR sees regulation as the governance structure of these interactions, and thus, as in standard transaction cost economics, it places emphasis in understanding the nature of the hazards inherent to these interactions. The emphasis on transactional hazards requires a microanalytical perspective, where performance assessment is undertaken within the realm of possible institutional alternative. In that sense, politics becomes fundamental to understanding regulation as the governance of public/private interactions. The paper discusses two fundamental hazards and their organizational implications: governmental and third party opportunism. Both interact to make regulatory processes and outcomes more rigid, formalistic, and prone to conflict than envisioned by relational contracting.

Suggested Citation

  • Spiller, Pablo T., 2013. "Transaction cost regulation," Journal of Economic Behavior & Organization, Elsevier, vol. 89(C), pages 232-242.
    • Handle: RePEc:eee:jeborg:v:89:y:2013:i:c:p:232-242
    DOI: 10.1016/j.jebo.2012.03.002
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    Cited by:

    1. Mande Buafua, Patrick, 2015. "Efficiency of urban water supply in Sub-Saharan Africa: Do organization and regulation matter?," Utilities Policy, Elsevier, vol. 37(C), pages 13-22.
    2. Athias, Laure & Saussier, Stéphane, 2018. "Are public private partnerships that rigid? And why? Evidence from price provisions in French toll road concession contracts," Transportation Research Part A: Policy and Practice, Elsevier, vol. 111(C), pages 174-186.
    3. Stéphane Saussier & Paola Valbonesi, 2018. "Introduction to the special issue: Public Procurement—new theoretical and empirical developments," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 1-4, March.
    4. Button, Kenneth, 2019. "Applied economics and understanding trends in air transportation policy," Transport Policy, Elsevier, vol. 80(C), pages 78-85.
    5. Pier Angelo Mori, 2013. "Customer ownership of public utilities: new wine in old bottles," Journal of Entrepreneurial and Organizational Diversity, European Research Institute on Cooperative and Social Enterprises, vol. 2(1), pages 54-74, August.
    6. Sylvain Rossiaud, 2014. "Opening the upstream oil industry to private companies," Working Papers halshs-00960681, HAL.
    7. Niklas Potrafke & Felix Roesel, 2019. "A banana republic? The effects of inconsistencies in the counting of votes on voting behavior," Public Choice, Springer, vol. 178(1), pages 231-265, January.
    8. Marian W. Moszoro & Pablo T. Spiller, 2018. "Implications of Third Parties for Contract Design," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 45(1), pages 5-16, March.
    9. Xu, Lili & Lee, Sang-Ho, 2018. "Corporate Social Responsibility And Environmental Taxation With Endogenous Entry," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 59(2), pages 61-82, December.
    10. Abhay Aneja & Marian Moszoro & Pablo T. Spiller, 2015. "Political Bonds: Political Hazards and the Choice of Municipal Financial Instruments," NBER Working Papers 21188, National Bureau of Economic Research, Inc.
    11. Rodolphe Durand & Robert M. Grant & Tammy L. Madsen & Sinziana Dorobantu & Aseem Kaul & Bennet Zelner, 2017. "Nonmarket strategy research through the lens of new institutional economics: An integrative review and future directions," Strategic Management Journal, Wiley Blackwell, vol. 38(1), pages 114-140, January.
    12. Andaluz-Alcazar, Alvaro, 2012. "Choix d'investissement sous incertitude des gestionnaires des réseaux de distribution (GRD) en Europe à l'horizon 2030," Economics Thesis from University Paris Dauphine, Paris Dauphine University, number 123456789/10862 edited by Keppler, Jan Horst.
    13. Olga N. Balaeva & Andrei A. Yakovlev, 2015. "Estimation of Costs in the Russian Public Procurement System: A Case Study of Voronezh State University," HSE Working papers WP BRP 41/MAN/2015, National Research University Higher School of Economics.
    14. Sylvain Rossiaud, 2015. "L’ouverture de l’amont pétrolier à des compagnies privées. Un cadre d’analyse en termes d’économie des coûts de transaction," Post-Print hal-01162793, HAL.
    15. Tamer Cetin & Yildirim B. Cicen & Kadir Y. Eryigit, 2016. "Do Institutions Matter for Economic Performance? Theoretical Insights and Evidence from Turkey," Koç University-TUSIAD Economic Research Forum Working Papers 1610, Koc University-TUSIAD Economic Research Forum.

    More about this item

    Keywords

    Regulation; Opportunism; Transactions costs; Utilities; Third party opportunism;

    JEL classification:

    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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