IDEAS home Printed from
   My bibliography  Save this paper

Institutional Transition And Transition Cost: A Methodological Consideration


  • SHIN, Jang-Sup

    (National University of Singapore)


This paper attempts to explain why institutional changes, whose direction look obvious at the beginning, arouse controversies and, more often than not, face ‘setbacks’. It starts from critically assessing North’s (1981; 1990) analysis of relating transaction cost and economic performance and argues for considering ‘transition cost’, separately from transaction cost, in designing institutional change. The ‘reformers’ are often interested in possible transaction cost reducing effect of institutional transition. But an institutional transition can be justified only if the reduction in transaction cost more than compensates for transition cost involved. It seems that many institutional reforms face problems because they ignore or underestimate the aspect of transition cost, the size of which is specific to institutions concerned.

Suggested Citation

  • SHIN, Jang-Sup, 2002. "Institutional Transition And Transition Cost: A Methodological Consideration," EIJS Working Paper Series 160, Stockholm School of Economics, The European Institute of Japanese Studies.
  • Handle: RePEc:hhs:eijswp:0160

    Download full text from publisher

    File URL:
    Download Restriction: no

    More about this item


    Institutional change; transaction cost; transition cost; economic reform;

    JEL classification:

    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East
    • P00 - Economic Systems - - General - - - General

    NEP fields

    This paper has been announced in the following NEP Reports:


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:hhs:eijswp:0160. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Nanhee Lee). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.