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Institutions, Transaction Costs and Productivity in the Long Run


  • Douglass C. North

    (Washington University)


The argument of this essay is that the immense productivity increases resulting from technological developments of the past century and a half could only be realized by fundamental changes in the institutional and organizational structure--a supply side argument; and that the consequent tensions induced by the resulting societal transformation have resulted (and are continuing to result) in politically-induced fundamental changes in the institutional structure to mitigate these tensions--a demand side argument. Both the supply side and demand side institutional changes have been and continue to be fundamental influences on productivity change.

Suggested Citation

  • Douglass C. North, 1993. "Institutions, Transaction Costs and Productivity in the Long Run," Economic History 9309004, EconWPA.
  • Handle: RePEc:wpa:wuwpeh:9309004
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    References listed on IDEAS

    1. La Croix, Sumner J, 1989. "Homogeneous Middleman Groups: What Determines the Homogeneity?," Journal of Law, Economics, and Organization, Oxford University Press, vol. 5(1), pages 211-222, Spring.
    2. Sunder, S., 1992. "Lower Bounds for Efficiency of Surplus Extraction in Double Auctions," GSIA Working Papers 1992-17, Carnegie Mellon University, Tepper School of Business.
    3. Jamal, Karim & Sunder, Shyam, 1991. "Money vs gaming: Effects of salient monetary payments in double oral auctions," Organizational Behavior and Human Decision Processes, Elsevier, vol. 49(1), pages 151-166, June.
    4. Armen A. Alchian, 1950. "Uncertainty, Evolution, and Economic Theory," Journal of Political Economy, University of Chicago Press, vol. 58, pages 211-211.
    5. Bikhchandani, Sushil & Hirshleifer, David & Welch, Ivo, 1992. "A Theory of Fads, Fashion, Custom, and Cultural Change in Informational Cascades," Journal of Political Economy, University of Chicago Press, vol. 100(5), pages 992-1026, October.
    6. Heiner, Ronald A, 1983. "The Origin of Predictable Behavior," American Economic Review, American Economic Association, vol. 73(4), pages 560-595, September.
    7. Thomas McCaleb & Richard Wagner, 1985. "The experimental search for free riders: Some reflections and observations," Public Choice, Springer, vol. 47(3), pages 479-490, January.
    8. Hahn, F H, 1987. "Information, Dynamics and Equilibrium," Scottish Journal of Political Economy, Scottish Economic Society, vol. 34(4), pages 321-334, November.
    9. repec:feb:framed:00135 is not listed on IDEAS
    10. Dhananjay, K.G. & Sunder, S., 1992. "A Comparative Analysis of Efficiency of Economic Institutions with Zero Intelligence Traders," GSIA Working Papers 1992-23, Carnegie Mellon University, Tepper School of Business.
    11. Coursey, Don L & Mason, Charles F, 1987. "Investigations Concerning the Dynamics of Consumer Behavior in Uncertain Environments," Economic Inquiry, Western Economic Association International, vol. 25(4), pages 549-564, October.
    12. Easley, David & Ledyard, John., "undated". "Theories of Price Formation and Exchange in Double Oral Auctions," Working Papers 611, California Institute of Technology, Division of the Humanities and Social Sciences.
    13. Gode, D.K. & Sunder, S., 1991. "Allocative Efficiency of Markets with Zero Intelligence (Z1) Traders: Market as a Partial Substitute for Individual Rationality," GSIA Working Papers 1992-16, Carnegie Mellon University, Tepper School of Business.
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    Cited by:

    1. repec:beo:journl:v:62:y:2017:i:215:p:53-80 is not listed on IDEAS
    2. Nikos Alabanos & Sotiris Theodoropoulos, 2016. "A key-point comparison & the new challenges for the existent Administrative Burden Models (A.B.M’s)," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 66(1-2), pages 32-45, January-J.
    3. repec:pai:apunup:es-34-01 is not listed on IDEAS
    4. McAllister, Ryan R.J. & Smajgl, Alex & Asafu-Adjaye, John, 2007. "Forest logging and institutional thresholds in developing south-east Asian economies: A conceptual model," Forest Policy and Economics, Elsevier, vol. 9(8), pages 1079-1089, May.
    5. repec:pai:apunup:es-37-05 is not listed on IDEAS
    6. Baccini, Leonardo, 2014. "Cheap talk: transaction costs, quality of institutions, and trade agreements," LSE Research Online Documents on Economics 44923, London School of Economics and Political Science, LSE Library.

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    JEL classification:

    • N - Economic History


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