Economics Dictionary of Arguments

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Transaction costs: Transaction costs are expenses incurred during the exchange of goods, services, or assets beyond the actual price. They include fees, time, effort, and information necessary for completing a transaction, encompassing negotiation, verification, and enforcement costs. These costs can affect market efficiency and influence decisions on whether to engage in economic exchanges. See also Efficiency.
Annotation: The above characterizations of concepts are neither definitions nor exhausting presentations of problems related to them. Instead, they are intended to give a short introduction to the contributions below. – Lexicon of Arguments.

Author Concept Summary/Quotes Sources

Jules L. Coleman on Transaction Costs - Dictionary of Arguments

Parisi I 20
Transaction costs/Coleman/Miceli: The choice between property rules and liability rules (...) delineates the scope of markets versus law in achieving an efficient allocation of resources.
>Liability rules/Calabresi/Melamed.
General Transaction Structure: The resulting framework has been characterized as the General Transaction Structure (GTS) for organizing exchange. which is adapted from Coleman (1988(1), p. 31), summarizes the framework in the context of the rancher-farmer dispute.
>Liability rules/Calabresi/Melamed.
Parisi I 22
GTS/General Transaction Structure:

A. Farmer:
I.Property rule: Farmer can enjoin ranching
II Liability rule: Farmer can seek compensation for damaged crops

B. Rancher:
III. Property rule: rancher is free to impose damage
IV. Rancher can seel compensation for abating damage.

Market/law/Miceli: The choice of which party receives the initial right (the winner) has distributional implications because it determines the assignment of a valuable entitlement. As to the enforcement rule, that has efficiency implications because it determines the manner in which any transfers away from the initial assignment can occur, whether by market exchange if transaction costs are low, or by legal exchange if they are high. In other words, the enforcement rule determines whether entitlements can be exchanged by markets or legal transfers.

* See, for example, Klevorick (1985)(2) and Coleman (1988(1), ch. 2).

1. Coleman, Jules (1988). Markets, Morals, and the Law. Cambridge: Cambridge University Press.
2. Klevorick, Alvin (1985). “On the Economic Theory of Crime,” in J. Roland Pennock and John Chapman, eds., NOMOS XXVII: Criminal Justice, 289–309. New York: New York University Press.

Miceli, Thomas J. „Economic Models of Law“. In: Parisi, Francesco (ed) (2017). The Oxford Handbook of Law and Economics. Vol 1: Methodology and Concepts. NY: Oxford University Press.

Explanation of symbols: Roman numerals indicate the source, arabic numerals indicate the page number. The corresponding books are indicated on the right hand side. ((s)…): Comment by the sender of the contribution. Translations: Dictionary of Arguments
The note [Concept/Author], [Author1]Vs[Author2] or [Author]Vs[term] resp. "problem:"/"solution:", "old:"/"new:" and "thesis:" is an addition from the Dictionary of Arguments. If a German edition is specified, the page numbers refer to this edition.
Coleman, Jules L.
Parisi I
Francesco Parisi (Ed)
The Oxford Handbook of Law and Economics: Volume 1: Methodology and Concepts New York 2017

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