Conceptual Challenges of Observability for Transaction Sector in Economy

Kuzmin, Evgeny A. and Berdyugina, Oksana N. and Karkh, Dmitri A. (2015): Conceptual Challenges of Observability for Transaction Sector in Economy. Forthcoming in: Mediterranean Journal of Social Sciences , Vol. 6, No. 4 S3 (August 2015): pp. 391-402.

Abstract

Stimuli for the sustainable economic development are mainly kept owing to a balanced sectoral structure. An ideal ratio between the transformation (production) and transaction components helps to smooth shocks from crises of institutional reforms. A nature of institutional reforms has led to a conclusion of an evolutionary expansion both in terms of a number of institutions themselves (horizontal supplement), and the complexity in elaborating rules and regulations for the proper behaviour (vertical supplement). These and other causes logically lead to strengthening in the transaction sector. In terms of a missing conventional agreement on an evaluation of the transaction sector in economy, the paper has presented a review and the authors have systematized some typical errors and inconsistencies in approaches. In opposition to the "cost-based" evaluation method by J. Wallis and D. North, the authors have presented an available alternative method to measure the value of the transaction sector using "cost" parameters. The research has shown the efficiency of the used "cost" approach to the evaluation that eliminates significant errors in the recalculation of the volume of the transaction sector in the economy.

• Item Type: MPRA Paper
• Language: English
• Keywords: Transaction costs, transaction sector, institutional reforms, sectoral structure of economy
• Subjects: B - History of Economic Thought, Methodology, and Heterodox Approaches > B2 - History of Economic Thought since 1925 > B25 - Historical ; Institutional ; Evolutionary ; Austrian; O - Economic Development, Innovation, Technological Change, and Growth > O1 - Economic Development > O17 - Formal and Informal Sectors ; Shadow Economy ; Institutional Arrangements; O - Economic Development, Innovation, Technological Change, and Growth > O4 - Economic Growth and Aggregate Productivity > O41 - One, Two, and Multisector Growth Models

References

Allen, D. W. (2000). Transaction costs. In Encyclopedia of law and economics (pp. 893-926). Edward Elgar Press.

Anikina, N. A. (2011). Tools to control transaction costs at agricultural enterprises in regional economic cooperation system. Fundamental Research, 12, 618-622.

Arrow, K. (1969). The organization of economic activity: issues pertinent to the choice of market versus non-market allocation. The Analysis and Evaluation of Public Expenditure: The PPB System, 1, 47-64.

Blokhin, A. A. (2001). Institutional aspect of price analysis in the Russian reforms. Forecasting Issues, 1, 116-136.

Chobanov, G., & Egbert, H. (2007). The rise of the transaction sector in the Bulgarian economy. Comparative Economic Studies, 49, 683-698.

Coase, R. H. (1937). The nature of the firm. Economica, 4 (16), 386-405. http://dx.doi.org/10.1111/j.1468-0335.1937.tb00002.x

Colby, B. G. (1990). Transaction costs and efficiency in water western allocation. American Journal of Agricultural Economics, 72, 1184-1192.

Commons, J. R. (1931). Institutional economics. American Economic Review, 21, 648-657.

Dagnino-Pastore, Farina J. M., & Farina, P. E. (1999). Transaction costs in Argentina. Paper presented at International Society for New Institutional Economics.

Datta, S., Chakrabarti, M., Nilakantan, R., & Datta, S. (2011). How does the transaction sector move in relation to the transformation sector during a development process? Insights from India's post-independence experiences. A Conference on Advances in Development Economics, Davidson Conference Center - USC, Los Angeles, California.

Demsetz, H. (1968). The Cost of transactin. The Quarterly Journal of Economics, 82 (1), 33-53.

Dollery, B., & Leong, W.H. (1998). Measuring the transaction sector in the Australian economy. Australian Economic History Review, 38 (3), 207-231.

Dubrovsky, V. Zh. (1999). Properties and characteristics of business organization in light of modern theoretical concepts. Proceedings of the Ural State University of Economics, 1, 29-36.

Efimova, E. G. (2008). Economics. Moscow, MGIU. Engelbrecht, H.-J. (2004). The transaction sector, the information economy, and economic growth in New Zealand: Taking Hazledine seriously. New Zealand Economic Papers, 38 (1), 87-99. http://dx.doi.org/10.1080/00779950409544395

Florence, P. S. (1929). The statistical method in economics and political science. London. Kegan Paul, Trench, Truberer & Co.

Folomiev, A. N. (2001). Efficiency of management in context of economic transformation in Russia. Moscow: RAGS Publishing House.

Gabre-Madhin, Eleni Z. (2001). Market institutions, transaction costs, and social capital in the Ethiopian grain market. Washington, DC: International Food Policy Research Institute.

Ghertman, M. (1998). Measuring macro-economic transaction costs: a comparative perspective and possible policy implications. Working paper, Jouy en Josas. France: École des Hautes Études Commerciales. [Paper presented at the Second Annual Conference of the International Society for New Institutional Economics]

Grigorieva, E. M. (2008). On measurement and minimization of transaction costs in economics. Finance and Credit, 30, 49-53.

Grigorieva, E. M., & Tarasova, Yu. A. (2010). Financial business structures: transformation influenced by market environment. Saint Petersburg: Petropolis Publishing House.

Hazledine, T. (2001). Measuring the New Zealand transaction sector, 1956-98, with an Australian Comparison. New Zealand Economic Papers, 35 (1), 77-100.

Heller, W. P., & Shell, K. (1974). On optimal taxation with costly administration. American Economic Association, 64(2), 338-345.

Klein, B., & Crawford, R. (1978). A vertical integration, appropriable rents, and the competitive contracting process. Journal of Law and Economics, 21, 297-326.

Kokorev, V. (1996). Institutional reforms in modern Russia: analysis of transaction costs dynamics. Issues of Economics, 12, 61-72.

Kuzmin, E. A., & Barbakov, O. M. (2015). Institutional efficiency and processes of institutional changes (as seen by the Russian academic tradition). Asian Social Science, 11 (6), 163-170. http://dx.doi.org/10.5539/ass.v11n6p163

Kuz'minov, I. Ya., Bendukidze, K. A., & Yudkevich, M. M. (2006). Course of institutional economics: institutions, networks, transaction costs, contracts. Moscow: GU VSHE Publishing House.

Langlois, R. N. (1992). Transaction cost economics in real time. Industrial and Corporate Change, 1 (1), 99-127. http://dx.doi.org/10.1093/icc/1.1.99

Litvintseva, G. P. (2005). Investment crisis because of non-compliance between structural and technology characteristics of economics and its institutional arrangements. In P. M.

Nureyev, & V. V. Dementieva (Eds.), Post-Soviet institutionalism (pp. 240-262). Donetsk: Chestnut.

Marschak, J. (1950). The Rationale of the demand for money and of 'money illusion'. Microeconomica, 2 (fasc. II), 71-100 [reprint in J. Marschak (1974). Economic information, decision, and prediction: selected essays (pp. 95-130). Springer].

Menger, C. (2007). Principles of economics. Ludwig von Mises Institute [translated reprint of C. Menger (1871). Grundsatze der Volkswirtschaftslehre].

North, D. C., & Thomas, R. P. (1973). The rise of the Western world: A new economic history. Cambridge University Press. http://dx.doi.org/10.1017/CBO9780511819438

Nureyev, R. M. (2005). Course of microeconomics: college textbook. Moscow: Norma.

Parisi, F. (1999). Coase theorem and transaction cost economics in the law. In J.G. Backhaus, The Elgar companion to law and economics. Edward Elgar Publishing. http://dx.doi.org/10.4337/9781843768692.00009

Polovinkina, N. V. (2005). Methodological basis for transaction costs analysis. Bulletin of N. I. Lobachevsky Nizhny Novgorod University. Series: Economics and Finance, 1, 677-682.

Polski, M. M. (2001). Measuring transaction costs and institutional change in the US commercial banking industry. Mimeo: Indiana University.

Poplavska, Zh. V. (2006). Transactional sector in Ukrain: assessment and development issues. Proceedings of DonNTU, Series: Economic, 103-1, 89-94.

Popov, E. V., & Gemby, M. N. (2011). Region transactional sector: monograph. Yekaterinburg: IoE of UB of RAS.

Popov, E. V. (2011). Transactions. Ekaterinburg: Ural Branch of Russian Academy of Sciences.

Potapova, I. S. (2008). History of economic thought. Moscow: MGIU.

Reichhardt, M. (1995). Der beitrag des transaktionskostenansatzes zu einer theorie der transformation von wirtschaftsordnungen. Frankfurt: Peter Lang. (Eine theoretische analyse mit empirischer untersuchung gesamtwirtschaftlicher transaktionskosten am beispiel West- und Ostdeutschlands).

Sarajeva, I. N. (2006). Challenges in assessing level of transaction costs in business sector of economics in Ukraine. Proceedings of DonNTU. Series: Economics, 103-2, 153-159.

Seyffert, R. (1966). Kosten der wege und der distribution industriell gefertigten konsumwaren. Cologne and Opladen: Westdeutscher. Verlag.

Smirnov, V. T., Soshnikov, I. V., Vlasov, F. B., & Poberezhnyi, P. A. (2005). Socio-economic institutions of Russia. Moscow: Machine-building-1.

Sulejewicz, A., & Graca, P. (2005). Measuring the transaction sector in the Polish economy, 1996-2002. Paper presented at the 9th Annual Conference of International Society for New Institutional Economics. Barcelona. The Flow-of-funds approach to social accounting: appraisal, analysis, and applications: a report of the National Bureau of Economic Research. (1962). Conference on Research in Income and Wealth, National Bureau of Economic Research. Princeton University Press.

Van Dalen, H. P., & Van Vuuren, A. P. (2005). Greasing the wheels of trade: a profile of the Dutch transaction sector. De Economist, 153 (2), 139-165. http://dx.doi.org/10.1007/s10645-005-2933-4

Verenikin, A. O. (1997). Transaction costs in market economy. Moscow University Bulletin. Ser. 6. Economics, 3, 52-64.

Wallis, J. J., & North, D. (1986). Measuring the transaction sector in the American economy, 1870-1970. In S. L. Engerman, & R. E. Gallman (Eds.), Long-term factors in American economic growth (pp. 95-162). University of Chicago Press.

Williamson, O. E., (1975). Markets and hierachies: analysis and antitrust implications. New York: Free Press.

Williamson, O. E. (1979). Transaction cost economies: the governance of contractual relations. Journal of Law and Economics, 22, 233-261.

Williamson, O. E. (1981). The economics of organization. The transaction cost approach. American Journal of Sociology, 87 (3), 548-577. http://dx.doi.org/10.1086/227496

Zimmermann, K. F. (2002). Frontiers in economics. Springer. http://dx.doi.org/10.1007/978-3-540-24739-5