Transaction costs include c. Transaction costs - what is it? Types, examples

Transaction costs (Transaction costs) - these are costs that do not relate directly to the production of products (costs for raw materials, wages, materials, transportation, etc.), but with the indirect costs associated with this production for collecting and searching for all the information necessary for activities, concluding various transactions, contracts , contracts, etc.

This term was first introduced by the American economist R. Coase in his work "The Nature of the Firm" in 1937, who later won the Nobel Prize in Economics precisely for the study of transaction costs in 1991.

There are several types of transaction costs. We list the most important of them.

Information Search Costs. This refers, first of all, to the costs associated with the search for counterparties of economic and other transactions, as well as the search for the maximum favorable conditions, in relation to price, purchase and sale. Before concluding the necessary transaction, the economic agent collects the information it needs about the counterparty (for example, Insurance Company, before insuring your life, will require from you a lot of certificates about your health, and will also check their authenticity). Prices for the same good can vary significantly in different markets, and each of us knows that people with lower incomes, before buying the necessary product, first go around several stores and markets in search of a low price.
Costs of concluding a business agreement (contract). To conclude the necessary agreement between the parties, the expenditure of money and time is required. For example, you are about to publish a detective novel that you have written. You will need a knowledgeable agent to negotiate with the publisher, so you will need cash to pay for the agent's services. The negotiations themselves will take some time. And finally, signing the long-awaited contract, as well as a friendly dinner with the publisher, will also be the transaction costs of concluding the contract.
Measurement costs. All goods have various properties that bring utility to their owner. For example, you are going to buy a fur coat. Before making a purchase, you need to make sure of the quality of the fur, dyeing, tailoring, etc. A picky buyer, before choosing, will wrinkle the fur, shake the fur coat, try to pull out the pile and maybe even sniff in order to determine the quality of the dressing. AT this case the cost of measurement makes it difficult to buy for those who do not have product knowledge. Minimizes measurement costs such property as trademark(brand) of some well-known company, but in this case, no one is immune from counterfeiting. Measurement costs are also associated with the purchase of measuring equipment (calculators, scales, dosimeters, cash registers etc.).
Cost of specification and protection of property rights. It can be noted that any specification, as well as the protection of property rights, is associated with an accurate definition of the object or subject of ownership, law enforcement agencies, the functioning of the judicial system, etc. As shining example one can consider the activities of many private small businesses in the recent past of Russia. In fact, the right of private property of any firm should be protected by the state, as in any civilized country in the world with a developed market economy. But, if for some reason the state does not cope with this task in full, then private business resorts to alternative means of protecting his property. In other words, firms resort to searching for so-called "roofs" that perform security functions for a fee.
Costs of Opportunistic Behavior. Those. costs associated with dishonesty and deceit, concealment of information that economic agents may encounter in their activities.
For example, revealing the punishment of a dishonest counterparty who violates the terms of the contract entails considerable costs. Costs are also required to protect oneself from such opportunistic behavior. For example, in currency exchange offices and cash desks of many financial and credit institutions there are special devices for detecting counterfeit banknotes. Honey connoisseurs, when buying it, without fail check it with a special chemical pencil. Dipping a pencil into honey, a person looks at the reaction: when stained in purple, it can be concluded that the honey is not real.

Transaction costs permeate the entire sphere of the economic life of society. We all face similar costs at every turn, sometimes without realizing it. Scientists often compare transaction costs in economics and friction in physics, drawing an analogy between them. The American economist D. Stigler wrote that “ the surrounding world with no transaction costs is as strange as the physical world with no frictional forces».

R. Coase argued that if all the types of transaction costs listed above are suddenly absent, then nothing can prevent the completion of transactions (transactions) and, as a result, eternity will be lived in a matter of fractions of a second. Exchange transactions would take place instantly, because not the slightest fraction of resources would be spent on the search for this or that information.

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Volchik V.V.

1. The concept and types of transactions

The concept of transaction was first introduced into scientific circulation by J. Commons.

A transaction is not an exchange of goods, but an alienation and appropriation of property rights and freedoms created by society. This definition makes sense (Commons) because institutions provide for the dissemination of will individual person outside the area within which it can influence environment directly by their actions, that is, beyond the scope of physical control, and therefore turn out to be transactions, in contrast to individual behavior as such or the exchange of goods.

Commons distinguished three main types of transactions:

1) Transaction transaction - serves to carry out the actual alienation and assignment of property rights and freedoms, and in its implementation, the mutual consent of the parties is required, based on the economic interest of each of them.

In the transaction of the transaction, the condition of symmetry of relations between counterparties is observed. The hallmark of the transaction transaction, according to Commons, is not the production, but the transfer of goods from hand to hand.

2) Transaction of control - the key in it is the relationship of control of subordination, which involves such interaction between people when the right to make decisions belongs to only one side. In a management transaction, behavior is clearly asymmetric, which is a consequence of the asymmetry of the position of the parties and, accordingly, the asymmetry of legal relations.

3) Rationing transaction - it preserves asymmetry legal status parties, but the place of the managing party is occupied by a collective body that performs the function of specifying rights. Rationing transactions include: drawing up the company's budget by the board of directors, the federal budget by the government and approval by a representative authority, decision arbitration court about the dispute that arises between the actors through which wealth is distributed. There is no control in the rationing transaction. Through such a transaction, wealth is endowed to one or another economic agent.

The presence of transaction costs makes certain types of transactions more or less economical, depending on the circumstances of time and place. Therefore, the same operations can be mediated by different types of transactions, depending on the rules they order.

2. The concept of transaction costs

Criticism of the position of the neoclassical theory that the exchange occurs without costs, served as the basis for the introduction to economic analysis new concept - transaction costs (transaction cost).

The concept of transaction costs was introduced by R. Coase in the 30s in his article "Nature of the Firm". It has been used to explain the existence of such hierarchical structures as opposed to the market, such as the firm. R. Coase associated the formation of these "islands of consciousness" with their relative advantages in terms of saving on transaction costs. He saw the specifics of the functioning of the company in the suppression of the price mechanism and its replacement by a system of internal administrative control.

Within the framework of modern economic theory, transaction costs have received many interpretations, sometimes diametrically opposed.

So K. Arrow defines transaction costs as the costs of operating the economic system. Arrow compared the effect of transaction costs in economics with the effect of friction in physics. Based on such assumptions, conclusions are drawn that the closer the economy is to the Walrasian general equilibrium model, the lower the level of transaction costs in it, and vice versa.

In the interpretation of D. North, Transaction costs “consist of the costs of evaluating useful properties the object of exchange and the cost of enforcing and enforcing rights”. These costs serve as a source of social, political and economic institutions.

In the theories of some economists, transaction costs exist not only in a market economy (Coase, Arrow, North), but also in alternative ways. economic organization and in particular in the planned economy (S. Chang, A. Alchian, Demsets). Thus, according to Chang, the maximum transaction costs are observed in the planned economy, which ultimately determines its inefficiency.

2. Typology of transaction costs Transaction and transformation costs

There are many classifications and typologies of transaction costs in the economic literature. The most common is the following typology, which includes five types of transaction costs:

1. Information search costs. Before a transaction is made or a contract is concluded, you need to have information about where you can find potential buyers and sellers of relevant goods and factors of production, what are the prevailing this moment prices. The costs of this kind are made up of the time and resources required to conduct the search, as well as the losses associated with the incompleteness and imperfection of the acquired information.

2. The costs of negotiating. The market requires the diversion of significant funds for negotiations on the terms of the exchange, for the conclusion and execution of contracts. The main tool for saving this kind of costs is standard (standard) contracts.

3. Measurement costs. Any product or service is a set of characteristics. The act of exchange inevitably takes into account only some of them, and the accuracy of their assessment (measurement) is extremely approximate. Sometimes the qualities of a product of interest are not measurable at all, and one has to use surrogates to evaluate them (for example, to judge the taste of apples by their color). This includes the costs of the relevant measuring equipment, the actual measurement itself, the implementation of measures designed to protect the parties from measurement errors and, finally, the losses from these errors. Measurement costs increase with increasing accuracy requirements.

Huge savings in measurement costs have been achieved by mankind as a result of the invention of standards for weights and measures. In addition, in order to save these costs, business practices such as warranty repair, company labels, purchase of batches of goods according to samples, etc.

4. Costs of specification and protection of property rights. This category includes expenses for the maintenance of courts, arbitration, government agencies, the cost of time and resources6 required to restore violated rights, as well as losses from their poor specification and unreliable protection. Some authors (D. North) add here the costs of maintaining a consensus ideology in society, since educating members of society in the spirit of observing generally accepted unwritten rules and ethical standards is a much more economical way to protect property rights than formalized legal control.

5. Costs of opportunistic behavior. This is the most hidden and, from the point of view of economic theory, the most interesting element of transaction costs.

There are two main forms of opportunistic behavior. The first is called moral hazard.

Moral hazard arises when one party relies on the other in a contract, and obtaining valid information about its behavior is costly or impossible. The most common type of opportunistic behavior of this kind is shirking, when the agent works with less output than is required of him under the contract.

Particularly favorable soil for shirking is created in the conditions of joint work by the whole group. For example, how to highlight the personal contribution of each employee to the total result of activity<команды>factory or government agency? We have to use surrogate measurements and, say, judge the productivity of many workers not by the result, but by the costs (like the duration of work), but these indicators often turn out to be inaccurate.

If the personal contribution of each agent to the overall result is measured with large errors, then his reward will be weakly related to the actual efficiency of his work. Hence the negative incentives that encourage shirking.

Special complex and expensive structures are being created in private firms and government agencies, whose tasks include monitoring the behavior of agents, detecting cases of opportunism, imposing penalties, etc. Reducing the costs of opportunistic behavior - main function a significant part of the administrative apparatus of various organizations.

The second form of opportunistic behavior is extortion. Opportunities for him appear when several production factors for a long time they work in close cooperation and get used to each other so much that everyone becomes indispensable, unique for the rest of the group. This means that if some factor decides to leave the group, then the other participants in the cooperation will not be able to find an equivalent replacement for it on the market and will suffer irreparable losses. Therefore, the owners of unique (in relation to a given group of participants) resources have the opportunity for blackmail in the form of a threat to leave the group. Even when<вымогательство>remains only a possibility, it always turns out to be associated with real losses (The most radical form of protection against extortion is the transformation of interdependent (interspecific) resources into jointly owned property, the integration of property in the form of a single bundle of powers for all team members).

The above classification is not the only one, for example, there is also the classification of K. Menard:

1. Isolation costs (similar to 5 (shirking).

We are aware of the costs that directly affect the final cost of the product. The company buys raw materials, hires people, provides workers with materials and technologies in order to get the final product, the final cost of which will include all production costs. But there is one more separate view expenses without which modern market the company is unlikely to manage. These are the so-called transaction costs.

Theoretical concept

Consider the example of the formation of transaction costs. They are not directly related to the production process and do not refer to materials or wages. But they also need to be taken into account when pricing.

According to economic theory, transaction costs (we will consider examples below) are the costs that ensure the transfer of property rights from one hand to another during the production process. It is very difficult to understand the theoretical material. But the example of transaction costs is very simple.

Suppose there is a company "H", which produces ice cream. The company already has everything: raw materials (milk, fruit additives, sugar, etc.), workers, technology and equipment. But no finished premises where the whole process will take place.

AT this example the management of the company needs to find in the shortest possible time someone who will lease the premises, who will make repairs in it, who will install the equipment. That is, at least you need to find three more contractors and conclude contracts with them. Of course, the company "N" can build a building for itself, make repairs in it and connect conveyors, but it will take so much time that the summer season may already be over. In this case we are talking about the example of transaction costs, when firm "H" transfers its powers and rights third party organization, but at the same time protects them through a written agreement.

Types of transaction costs

In the field of market relations, there are five examples of transaction costs in an enterprise:

expenses associated with the search for information;
losses during negotiations and conclusion of contracts;
the costs of the process of measuring any value;
expenses for the protection of property rights;
costs of opportunistic behavior.

Search costs

Consider a simple example of the transaction costs of information retrieval. Again, take the company "H", which produces ice cream. The first batch of sweet treats is already ready, but who will sell it to? The entire population of the nearest small town has already fallen in love with the ice cream of the company "Z" - "Green" and does not want to change it to "N" - "Natalkino". Firm "H" has to look for potential buyers. The management travels to another city 100 km away, spends money on gasoline or tickets, monitors the market, studies the needs of people, their preferences, etc. As a result, Firm N finds buyers, but money and time were spent on finding them.

The same could be done more simply. Entrust the marketing company with a part of their rights and conclude an agreement according to which the contracting company undertakes to carry out marketing research consumer market in order to determine the volume of future demand. All costs for the contract with the marketing firm would be considered transaction costs.

The cost of negotiating and concluding contracts

Let's consider an example of the formation of transaction costs, when the company "H" has already found a contractor for itself - the marketing agency "A". But the second was not satisfied with the initial price, and they ask the employer for a large amount of remuneration. Company "H" is not ready to pay more, and lengthy negotiations are underway, the contract is not signed, production is idle, ice cream is not sold. This is another item that will be referred to as transaction costs in accounting.

Measurement costs

This type of cost is associated with checking the quality of products. On ice cream, this is not so noticeable, since the goods must be standard and comply with state standards. But in such a field as the automotive industry, mechanical engineering, the appearance of marriage at any stage can lead to the loss of huge amounts of money. Such an example of the formation of transaction costs best describes the essence of measurement costs.

To exclude marriage, you need to devote a lot of time at each stage to checking the compliance of details.

Cost of specification and protection of property rights

Let us give an example from the life of transaction costs. Let's say one person invented a completely new technology for making ice cream, which can save on water and electricity. This person works as a creative director in our company "N". Not having time to patent the idea, we introduce it into production. But our company turned out to be a spy who passed secret data to competitors. And now firm "Z" also uses our technology.

There is a dispute. To protect their rights and their idea, Form "H" files a lawsuit with a claim for information theft. All costs incurred by the company "H" for obtaining a patent and going to court will be attributed to the column of transaction costs.

Costs of Opportunistic Behavior

At first glance, this seems to be a very complex concept. But the example of transaction costs in an enterprise is familiar to almost everyone. The question concerns the main and contracting organization, when one of the parties does not want to perform the functions prescribed by the contract. The reasons for this are banal: we will take the money, but we will not do anything, or we will do it poorly. This happens all the time. The firm orders the construction of the building, and the contractor, having taken the money and pulled out the foundation pit, evaporates in an unknown direction. There are costs, but no work. This is called opportunistic behavior, that is, dishonest, dishonest attitude to the terms of the contract.

O. Williamson classification

Examples of transaction costs can be divided into two categories: by frequency of transactions and by asset specificity.

One-time or the easiest exchange on the market with unknown sellers and buyers. This process is performed by each of us almost daily. Let's say you need batteries. You go to the store and buy batteries, and next time you go only when they run out again. The seller is indifferent to whom to sell, and the buyer - from whom to buy. A similar situation arises with any small household items.

When it comes to expensive equipment, there will no longer be a one-time deal. The buyer will carefully choose, look closely, ask the price before making a choice.

Recurring exchange

With this type of exchange, assets do not have specific features. But there is already consistency. For example, you buy milk from the same seller every day. You know what his goods good quality, you are satisfied with the price, and you come again and again. Thus, we see an example of reducing transaction costs.

If there is one and the same seller, then there is no need to run around and look for others, and even discounts are given to regular customers. Therefore, it is more profitable to conclude reusable deals with trusted partners.

For the same purpose, supermarkets come up with bonus or accumulative cards. Having good discount in one supermarket, the buyer will not run to others, and the store will get a regular customer.

In business, two things are important:

find a reliable seller;
retain a loyal customer who will become a permanent one.

If the firm has a circle regular customers who make a profit, you do not need to look for others. Thus, there is an example of a reduction in transaction costs on the part of the manufacturer.

Recurring contract related to investments in specific assets

Specific assets are means aimed at achieving a specific goal. Such a deal is updated every time it is concluded, and a certain amount of money is allocated for it.

Consider an example. Let's say firm "H", which produces ice cream, needs to build a workshop. She hires a contractor and they draw up a contract. Target funds are allocated for construction. When the workshop is already built, the company will use it for the purpose for which it was built, that is, work in it. If the company wants to do something else in the workshop, for example, rent it out as a warehouse, then it will incur additional costs which would be absolutely unprofitable for her.

The modern world is dynamically developing in all types of activities, improving and creating unique items. In view of such dynamics, new concepts and terms arise that are not always clear to many people. For most people, such a word as “costs” is clear, but it is not clear what the costs related to transactions are. This article will reveal this topic and help you understand the necessary terms, reveal the essence and analyze the types of this concept.

Why are transaction costs needed and where are they used?

It is quite natural that any company, firm or production is engaged in the development of any services or goods, is engaged in the supply of food or other types of raw materials necessary for the life of people. That is why they create special conditions for the quality of the work of these companies. Transaction costs are an inevitable process for many of them. What is included in this concept? Why are these costs necessary? What is their purpose?

Transaction costs are those costs that are spent on finding the necessary information, on negotiating, on protecting the property rights of a firm or enterprise. This also includes the costs of avoiding low-quality counterparties who are able, for their own benefit and profit, to deviate from the agreements that were established between them and the company. It is these components that can cause great damage to an enterprise that has saved or completely abandoned such costs. Therefore, more and more companies are paying transaction costs Special attention in addition to many other expenses associated with the conclusion of the necessary contracts.

On the meaning of theory

A few years ago, the theory of transaction costs was created, and it has many followers. Its value is relevant to this day, since it fully justifies itself in the world market. Everyone will agree that there are many situations in life where people want to be deceived, to appropriate their own finances, without giving anything in return. The same situation, alas, is widespread in many structures of countries. The essence of the theory of transaction costs is to properly organize all stages of the transaction: find the necessary counterparty, organize negotiations, discuss all the necessary conditions for creating an agreement, conclude the transaction itself and control the process of fulfilling all the conditions on both sides.

Naturally, such a theory could not be ignored. And this is due to many reasons. Here, the entry of some countries into the world market, and the influence of the state on the conclusion of certain transactions, and the division of labor between different countries, and therefore their markets, also play a role. Situations are also known when integral property rights were split into partial rights belonging to different owners. In this case, the transaction costs of property rights must also change. And in countries where market relations are weakly strengthened, this theory is of particular importance. It helps to minimize the risks associated with distorted information about services and goods supplied by one or another counterparty.

Classification of transaction costs

In general, there are many transaction costs. Therefore, there is a certain classification of transaction costs. The first group includes costs that determine the constituent details of the contract being concluded. In other words, the search for goods and services on the market that are necessary for a particular enterprise or firm.

The second group includes the costs associated with the search for partners. It is necessary not only to find them, but also to determine the prices for their goods and services, assess the likelihood of working with them, their ability to fulfill the terms of the contract, etc. The third group includes costs associated with direct coordination. Here the interests of the customer are important, and the whole structure is carried out in such a way as to organize negotiations between the parties.

The fourth group includes the costs that must be spent on the acquisition additional information by transaction. And the last, fifth group includes the costs associated with opportunism. It would seem that a difficult word, but its meaning has already been said in this article. This is the concept of an unscrupulous contractor who wants to cash in on the customer.

What can the absence of transaction costs lead to?

Of course, many authors create and single out other types of transaction costs, but their general essence is absolutely unchanged. The names of certain groups may differ, but not their meaning. It is also natural that not all types of costs are always involved in concluding a contract. It all depends on the situation, on the purchased service or product, on the information received earlier.

Transaction costs are those that may be associated with a less serious contract. It should be understood that costs can increase significantly due to the fact that the search for the necessary information is carried out for a long time, that the signing of the necessary contract is delayed, that not all risks can be reduced to zero with the help of costs.

In general, if we consider in the most detail, then no costs can fully guarantee a trouble-free outcome. Why then are they needed at all? Why spend money? It is also a mistake to think that transaction costs cannot help. If employees approach their duties with high quality and conduct suitable work, then many consequences can be avoided and not lose the financial component of the transaction.

Government support for firms and contracts

The transaction costs of the firm, as already mentioned, include the costs of protecting property rights. Moreover, such costs occupy a rather important position, they are given special attention. In fact, there are a wide variety of different firms. These can range from small businesses on their own to large companies with many different divisions.

However, they all want to make a big profit, income, spending the minimum amount of money on this. But such processes should be approached very carefully and seriously. If the owner constantly violates the rights, then this aggravates his position. How? Everything is pretty simple. He spends too much time and money in order to regain these rights again. He has to allocate a lot of funds to the state, judicial body, which are engaged in the protection of order. Without the support of such devices, protecting property is quite difficult and expensive.

Therefore, the majority of all existing firms prefers to officially register and fix the contracts concluded. This gives a kind of guarantee that the terms of the contract will be observed, and the rights of the company will be preserved. Otherwise, the registered company will be supported by the state apparatus of power and will punish the unlucky performer.

Variety of problems

Transaction costs in the economy are a significant problem for those who are forced to take advantage of them. It would seem, what is the problem? The company has funds, it manages them, pays necessary costs. However, any company or firm must calculate and see not only the profit from the concluded contract, but also the losses associated with it. It is often very difficult to calculate transaction costs. With what it can be connected?

There are quite a few factors. It is worth considering them in more detail. Naturally, some part cannot be calculated in a direct way. The example is very simple: there is no exact and definite time that will be spent on standing in numerous queues in any institutions and filling out many reporting forms. There are also costs that are not associated with a cash payment and require an equivalent exchange for any service. In addition to all this, there are many other costs that can be attributed to informal elements. And the more often you have to use them, the more difficulties arise in solving problems associated with a deal or contract. It should be understood that if there are informal elements in the costs, then this does not mean that they are illegal.

Avoiding bankruptcy

Market transaction costs can apply not only to customers and partners, but also to competitors. And it would seem, why spend money on this information, on its search and processing? And here the answer is pretty obvious. As already mentioned, any company wants to make a profit. And even better, this profit should be constant. This is necessary to maintain the firm so that it does not become bankrupt. Of course, it is necessary to calculate everything in such a way that the costs pay off and lead to a certain income.

So what do you need to know about competitors? Obviously, it is necessary to have a sufficient amount of information about competing firms, about their policies and strategies for working in the market. It is then that you can improve the work of your own company, create your own unique strategy and protect the company from failure and subsequent bankruptcy. In addition to all this, transaction costs should help in obtaining the necessary information about the benefits of concluding a particular contract or about its inefficiency. Collection, processing, constant monitoring of changes in such information can significantly reduce costs.

Selection of working personnel

Transaction costs are costs that cannot be avoided but can be reduced. There are many more ways to this process. Any head of the company must personally understand what types of costs may exist, what they are aimed at and what benefits and efficiency they can bring. When the question arises of the need to conclude a particular contract, to provide a particular service, the manager himself must consider this situation. It is his opinion that should be the first stage in the implementation of this work.

But the whole company must have certain skills and knowledge in order to make efforts and achieve the final result at the highest level. It is necessary to create a professional team that will be able to solve the tasks in a short time and bring a certain profit to the company. Here everyone should understand the essence of their duties. An accountant, a recruiting manager, a manager - they are all part of a huge mechanism. Therefore, the internal work of the company is also able to disrupt the deal or bring good profits.

An example from everyday life

There are many examples of transaction costs. Everyday life of people. Each of us is faced with them almost everywhere and always. And just like a firm or a company, it tries to minimize them. For example, a person needs to make repairs in an apartment (or just want to freshen up the repairs). He can do repairs on his own, or he can hire a separate team of workers who will do any work for a certain amount. Of course, there are teams that will work with their own material, which will significantly increase the cost of such repairs. But there are also teams that will do repairs with the material that the owner of the apartment will personally buy. All these are examples of the costs that a person will incur to update his apartment. However, there is an option to minimize these costs. The owner of the apartment can buy different materials in various stores in the city. Why? Everything is simple. He believes that somewhere is better, somewhere cheaper, etc. Well, as mentioned above, the owner of the apartment can make repairs on his own, while he spends his personal time, which can also be attributed to a certain type of cost.

Complete absence of transaction costs

Transaction costs is a term that can be applied not only to business or market relations. Its meaning is used in many areas of human life, but it is important to understand its essence. Of course, there is still a huge variety of different types, subspecies and classifications of these costs.

Many authors have studied this concept, compiled a variety of tables and materials to help people. What remains unchanged is that this term is very relevant at the moment. Is it possible to say that in the near future it will be possible to completely abandon transaction costs? It seems that no one can say for sure yet. The world is changing, improving, creating something new. But what awaits people in the future, no one knows for sure. Therefore, many companies and firms around the world use their strategies and policies, which are considered the most effective for them.

Transaction costs contribute to the transfer of property rights from one entity to another and the protection of these rights.

This type of cost has been identified in economics since the 1930s by the scientist Ronald Coase, and now this term is widely used. Coase is the author of the article "The Nature of the Firm", where the economist called transaction costs the costs of the market.

Types of transaction costs

It is customary to consider 5 main types transaction costs:

collection of information;
costs in the course of negotiations and signing of agreements;
measurement costs;
protection of the rights of the owner;
opportunistic behaviour.

The costs of collecting information arise as a result of its uneven distribution in the market. In order to search for possible consumers or sources of sales, certain finances and time are spent. If the information is not given in full, this leads to the cost of buying products at a cost higher than the equilibrium, or selling at a price below the equilibrium. Financial losses also occur when purchasing analogous goods.

The costs of negotiating and signing agreements are also time and resource costs. The legal conclusion of a contract often requires such expenses that seriously increase the price of the goods.

Measurement costs is the main type of transaction costs. They are both equipment costs and losses due to measurement errors that are always present in such activities. Moreover, for some products only indirect or incomplete measurement is possible. For example, assessing the quality of a car before purchasing or the level of training of a new employee of an enterprise. Partially, the savings are provided by standardization and company guarantees (free repair, replacement of defective goods). But it is unrealistic to completely eliminate costs in such ways.

A significant place is occupied by costs of specification and protection of property rights. With a systematic violation of rights, the owner spends a lot of time and money to restore them. This applies to deductions to state and judicial bodies that maintain order.

Costs of Opportunistic Behavior refer also to errors in the distribution of information. It is very difficult to predict the actions of the parties to the contract after its conclusion. Unscrupulous citizens will comply with the terms of the agreement to a minimum extent or not comply with them at all, if no punishment is introduced for this. Here arises the so-called moral hazard, as a result of the uneven contribution and unequal opportunities of each party to the contractual obligation. Thus, opportunistic behavior is the evasion of a person from obligations under a contract in order to profit from the activities of his colleagues. In extreme cases, it is extortion and blackmail, when some team members understand their need for others. They require partners to fulfill any conditions under the threat of termination of their activities.

So, transaction costs are formed before the exchange, after or during it. Separation of areas of activity and deeper specialization affects the increase in these costs. Their size also depends on the form of proprietary relations prevailing in a given sphere. The economy distinguishes three types of property: private, common, state. Let's clarify what their relationship with costs is.

Transaction cost example

Let's take examples from everyday life. Let's say you're renovating an apartment. You have the right to make repairs yourself, it all depends on the ability and desire. But it is also possible to hire a separate specialist for each procedure, and manage the process yourself. At the same time, you buy paint and other expendable materials. In the latter case, such transactions are selected that exclude cooperation with one company. The reason is that you have a distrust of the organization and the opinion that it has its own benefit to make repairs more expensive than you can do it yourself. However, if you are wealthy and extremely busy, it is easier to contact a repair organization to avoid high time opportunity costs. In this example, the so-called “wealth effect” operates, such a term was also created by R. Coase. According to his classification, transaction costs are opposed to “agent costs”, and the wealth effect plays a decisive role in choosing between the two categories.

Now most specialists consider transaction costs in an integral form, as errors in the operation of the system. These costs arise when property rights are exchanged in the presence of incomplete information, or their approval under the same condition. Defending their rights, the owners do not conclude any new contracts, but try to save their property from the encroachment of third parties. They are concerned about the infringement of their rights from outside, which is why they are ready to spend money on their protection (for example, installing a fence or maintaining employees of security companies).

Coordination and motivational costs

According to other criteria, transaction costs were classified by scientists Paul R. Milgrom and John Roberts. In their opinion, costs depend on indicators such as coordination and motivation.

Coordination costs:

costs of revealing the details of the contract. Arise as a result of market analysis in order to identify what can be purchased on it;
contract definition costs. Analysis of the conditions of suppliers of products and services.
costs of direct coordination. Artificial formation of a structure that unites the parties.

Motivational costs:

associated with insufficient information. The lack of information about the market often leads to a refusal to purchase a product (service). The fact is that uncertainty is so serious that it is easier for a consumer not to purchase a product (service) than to spend time and money searching for information.
opportunistic costs. They consist in overcoming the consequences of opportunism, i.e. dishonest behavior of a contract participant. For this, an overseer may be hired, or additional means of control over the activities of this person may be applied.

The difference between transactions by the specifics of assets and by frequency

O. Williams revealed the difference between transactions in terms of the specifics of assets and frequency.

Single (elementary) market exchange. For example, buying a teapot. You will purchase this product only when the previous ones fail. For the seller, it does not matter who buys this product. The main indicator here is the price.

Re-exchange of consumer goods. There are no special assets in this case. For example, you visit only one bakery shop, and you do not need to spend time and money buying bakery products elsewhere. This is beneficial both for you (save on the evaluation of different goods) and for sellers who are confident in the sale of their products.

Investment in specific assets. Such an asset is always created for a specific transaction. Let's say the building was built for the purpose of renting it out as a workshop. It can be used in other ways, but losses are possible. That is, any possibility of using the resource in a different way will bring less income. Specific assets are the costs of activities that bring little benefit.

Investing in unique assets.

indosyncratic asset- a resource that, in the case of an alternative use, is completely depreciated. For example, half of the funds invested in the production process. Suppose there is only one option for using the built blast furnace. Such an asset makes sense only in combination with a specific technology.

Minimization of transaction costs

Everyone modern manager seeks to minimize transaction costs. This is a theoretical indicator, it is not taken into account in accounting and management documents. The concept most often used in practice is overhead costs. These are the costs that ensure the production cycle, together with the main ones: for the management, maintenance and use of equipment, its maintenance. They do not directly depend on the amount of output.

The head of the enterprise must know all types of transactions and be able to draw up a so-called transaction plan that will help to release products or provide services with a minimum of costs. To reduce them, it is necessary to reduce transactions, automate production, and stabilize working conditions. Consider the transactions of a medium-sized organization:

logistics. Transportation of materials, their order and direct delivery, execution of the transaction. Produced by specialists who are not involved in production.
supply. Providing the production cycle with resources in the form of materials, work force and technology. Here, the decisive role belongs to those responsible for the selection of personnel and the purchase of raw materials. This process includes making production plan and forecasts, quality management.
modernization. Company use the latest technologies, improvement of technical operations. Directly related to information processing.

In the event of a change in the type of manufactured product, amendments are made to the certification of the product and control over its quality, which increases transaction costs.

Transformation costs

By the way, from an economic point of view, there are two types of costs: transaction and transformation.

First type (transactional) represents the costs incurred as a result of the technical transformation of the source material from which a product of a certain value is obtained.
To the second category of costs (transformational) includes costs for measurement and planning. Often they are not taken into account, or they are considered transaction costs, but in fact they are purely technological.

Transactional, in comparison with transformational, are not related to the formation of prices.

Choice coordination in different economic systems

AT economic activity there is no chaotic (Brownian) movement: the process of production, distribution, exchange and consumption of material goods and services is carried out in an organized manner. In order to make its choice in a world of limited resources, the economic entity must have the necessary information about what, how and for whom to produce.

The question involuntarily arises: “Who and how organizes the coordination of the choice made by people in the process of their daily economic activity?” Economic theory considers two various ways coordination: spontaneous (spontaneous) and hierarchical (centralized).

In spontaneous orders, the information needed by producers and consumers is transmitted through price signals. An increase or decrease in the price of resources and the benefits produced with their help tell economic entities in which direction to act, i.e. what, how and for whom to produce. In any economic system, the producer must calculate his costs and benefits. But the cost-benefit ratio can only be calculated using the price mechanism. This mechanism coordinates the economic choice of people. Such a mechanism or order is called spontaneous (spontaneous). Spontaneous order arose naturally, in the course of the development of human civilization. The market is the spontaneous order.

An alternative way to obtain information about what, how and for whom to produce is a system of orders and instructions that goes from top to bottom, from a certain center to the direct producer. Such a system is called a hierarchy. An example of a hierarchy can be a primitive community and a command-administrative system. In the form of a hierarchy, the enterprise also carries out its activities. The hierarchy is based not on price signals, but on the power of the leader or central government agency.

In reality, there is a coexistence of spontaneous orders and hierarchies in proportion corresponding to the goals of the economic system.

In any economic system with developed market relationships, enterprises spend significant amounts of money searching for and processing information about prices and technologies, concluding contracts, legal registration control over their implementation. These costs are often hidden, but participants in the economic process are forced to reckon with them, since the size of such costs can often exceed economic effect from them and destroy the relationship between enterprises. These costs in economic theory are called transaction costs (R. Coase). Transaction costs are not directly related to production, but represent costs that contribute to the development of exchange, the conclusion of transactions. Here are some of them:

1. Costs of searching for information about counterparties of economic transactions in order to obtain the most favorable terms of sale.

2. The costs of concluding a business agreement (contract). This requires an investment of time and money.

3. Measurement costs, which are associated with the need to spend on the acquisition of measuring equipment, on obtaining the knowledge of a merchandiser or on acquiring a trademark.

4. The costs of specification and protection of property rights associated with the costs of establishing the object and subject of ownership, as well as the functioning of the judicial system and law enforcement agencies ( alternative way protection of their property - "roof").

5. The costs of opportunistic behavior, meaning dishonesty, deceit, hiding information. In short, these are calculated efforts to shoot down the right way. Opportunistic behavior entails tangible costs both before and after the deal is closed. Identification and punishment of the violator of the contract are connected with costs.

Transaction costs permeate the entire fabric of the economic life of society. If all the listed types of costs are absent, then the exchange would take place instantly, because it would not be necessary to direct resources to the activities mentioned above. We can say that transaction costs are the costs of the economic system itself. Any economy is faced with transaction costs, and economic agents seek to reduce their value. The task of minimizing transaction costs is performed by institutions. "Institutions" are a set of formal and informal rules created by people, acting as a restriction for economic agents, as well as appropriate control mechanisms for their observance and protection. They represent the framework within which people interact with each other. Institutions reduce the uncertainty faced by economic entities in the course of their activities and thus contribute to minimizing transaction costs. Thus, it is necessary to evaluate the effectiveness of spontaneous orders or hierarchies from the point of view of saving transaction costs. The theory of transaction costs helps to understand why the socialist economic system turned out to be inefficient. Management of the economy by public authorities, especially if it is comprehensive, is very expensive for society. There is an opinion that an attempt to build everything social production by type of enterprise turned out to be insolvent due to huge transaction costs. Coordinating the economy from a single center is an extremely costly method, and its price increases along with the growth of the scale of the economic system. Ultimately, it turned out that such a method is generally impossible to solve purely economic problems.