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Transaction Costs of Exchange in Agriculture: A Survey

Author

Listed:
  • Agham C. Cuevas

    (College of Economics and Management, University of the Philippines Los Baños)

Abstract

The concept of transaction cost has been around for more than 75 years. It has been used to explain every economic phenomenon that does not fit with standard neoclassical predictions. It has been applied to so many fields, its definition varying with every application. This paper surveys the literature on transaction costs in general, as well as those that apply transaction costs to agriculture. It focuses on the role of transaction costs in exchange in agriculture, particularly in the context of the household’s decision to engage in market exchange, in both input and output sides. The survey literature finds a confluence of definitions of transaction cost as applied to theoretical and empirical models. Coasian and Williamsonian definitions are used in interpreting fixed transaction costs while neoclassical and trade definitions (i.e., the concept of price band) characterize proportional transaction costs. The prominence of transport cost and the effect of distance and isolation in many of the analyses points to the influence of the new economic geography research stream. Measurement of transaction cost as an ad valorem tax also references the trade concept of transaction cost.

Suggested Citation

  • Agham C. Cuevas, 2014. "Transaction Costs of Exchange in Agriculture: A Survey," Asian Journal of Agriculture and Development, Southeast Asian Regional Center for Graduate Study and Research in Agriculture (SEARCA), vol. 11(1), pages 21-38, June.
    • Handle: RePEc:sag:seajad:v:11:y:2014:i:1:p:21-38
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    File URL: https://ajad.searca.org/article?p=473
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    Citations

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    Cited by:

    1. Mahlako Nthabeleng Mokgomo & Clarietta Chagwiza & Phathutshedzo Fancy Tshilowa, 2022. "The Impact of Government Agricultural Development Support on Agricultural Income, Production and Food Security of Beneficiary Small-Scale Farmers in South Africa," Agriculture, MDPI, vol. 12(11), pages 1-21, October.
    2. Pham Quoc Hung & Huynh Viet Khai, 2020. "Transaction cost, price risk perspective and marketing channel decision of small-scale chili farmers in Tra Vinh Province, Vietnam," Asian Journal of Agriculture and rural Development, Asian Economic and Social Society, vol. 10(1), pages 68-80, June.
    3. Christopher Ugochukwu Nwafor & Abiodun A. Ogundeji & Carlu van der Westhuizen, 2020. "Adoption of ICT-Based Information Sources and Market Participation among Smallholder Livestock Farmers in South Africa," Agriculture, MDPI, vol. 10(2), pages 1-13, February.
    4. Steffen, Christoph & Yu, Xiaohua, 2018. "Transaction Costs and Food Prices in Rural Kenya," Department of Agricultural and Rural Development (DARE) Discussion Papers 274537, Georg-August-Universitaet Goettingen, Department of Agricultural Economics and Rural Development (DARE).
    5. Hung, Pham Quoc & Khai, Huynh Viet, 2020. "Transaction Cost, Price Risk Perspective and Marketing Channel Decision of Small-Scale Chili Farmers in Tra VInh Province, Vietnam," Asian Journal of Agriculture and Rural Development, Asian Economic and Social Society (AESS), vol. 10(01), January.
    6. Diwakar KC & Tek Maraseni & Chubamenla Jamir & Ritendra Thapa Magar & Florencia Tuladhar, 2020. "Effectiveness of Gravity Goods Ropeways in market participation of smallholder farmers in uplands," Transportation, Springer, vol. 47(3), pages 1393-1414, June.
    7. Nguyen Hung Anh & Wolfgang Bokelmann, 2019. "Determinants of Smallholders’ Market Preferences: The Case of Sustainable Certified Coffee Farmers in Vietnam," Sustainability, MDPI, vol. 11(10), pages 1-20, May.

    More about this item

    Keywords

    transaction costs; agriculture; agricultural exchange;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • Q13 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Markets and Marketing; Cooperatives; Agribusiness
    • B52 - Schools of Economic Thought and Methodology - - Current Heterodox Approaches - - - Historical; Institutional; Evolutionary; Modern Monetary Theory;

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