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Transaction Costs, Market Failure and Economic Development

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  • Todorova, Tamara

Abstract

This paper relates economic development to transaction costs. It reveals the triad transaction costs-market failure-economic underdevelopment. Many scholars attribute the problems of development to the failure of markets to perform their role of resource allocation. Some deny market failure and blame government instead. Of those who trace the roots of economic backwardness to market failure, few, if none, investigate transaction costs in their linkage with market failure. This paper tries to bridge development economics with transaction cost theory and new institutional analysis.

Suggested Citation

  • Todorova, Tamara, 2016. "Transaction Costs, Market Failure and Economic Development," EconStor Preprints 157218, ZBW - Leibniz Information Centre for Economics.
    • Handle: RePEc:zbw:esprep:157218
    as

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    File URL: https://www.econstor.eu/bitstream/10419/157218/1/Transaction%20Costs%20and%20Development.pdf
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    References listed on IDEAS

    as
    1. Krueger, Anne O, 1990. "Government Failures in Development," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 9-23, Summer.
    2. North, Douglass C, 1994. "Economic Performance through Time," American Economic Review, American Economic Association, vol. 84(3), pages 359-368, June.
    3. Datta-Chaudhuri, Mrinal, 1990. "Market Failure and Government Failure," Journal of Economic Perspectives, American Economic Association, vol. 4(3), pages 25-39, Summer.
    4. Bardhan, Pranab, 1989. "The new institutional economics and development theory: A brief critical assessment," World Development, Elsevier, vol. 17(9), pages 1389-1395, September.
    5. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Kyung-ha Kim, 2020. "The role of mobile money in improving the financial inclusion of Nairobi’s urban poor," African Journal of Science, Technology, Innovation and Development, Taylor & Francis Journals, vol. 12(7), pages 855-865, November.
    2. Todorova, Tamara, 2022. "Оливър Уилямсън: Новатор На 20 Век И Основател На Новата Институционална Икономика [Oliver Williamson: an innovator of the 20th century and founder of the new institutional economics]," MPRA Paper 121077, University Library of Munich, Germany.
    3. N. Usmanova & N. Orlova & T. Shindina & G. Vlasova & N. Knyazeva, 2018. "Intercompany Relations of Stakeholders of Investments and Projects," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 567-578.
    4. N. Usmanova & N. Orlova & T. Shindina & G. Vlasova & N. Knyazeva, 2018. "Intercompany Relations of Stakeholders of Investments and Projects," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 567-578.
    5. Alessandro Morselli, 2024. "Paolo Sylos-Labini’s Contribution to and Affinities for Institutional Economic Thought," Economic Thought journal, Bulgarian Academy of Sciences - Economic Research Institute, issue 2, pages 222-240.

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    More about this item

    Keywords

    Transaction costs; Market failure; Opportunism; Economic development;
    All these keywords.

    JEL classification:

    • D02 - Microeconomics - - General - - - Institutions: Design, Formation, Operations, and Impact
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • P14 - Political Economy and Comparative Economic Systems - - Capitalist Economies - - - Property Rights

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