Why transaction costs are so relevant in political governance? A new institutional survey

Vol. 36 No. 2 (2016)

Apr-Jun / 2016
Published March 1, 2020
PDF-English
PDF-English

How to Cite

Caballero, Gonzalo, and David Soto-Oñate. 2016. “Why Transaction Costs Are so Relevant in Political Governance? A New Institutional Survey”. Brazilian Journal of Political Economy 36 (2):330-52. https://doi.org/10.1590/0101-31572016v36n02a05.

Why transaction costs are so relevant in political governance? A new institutional survey

Gonzalo Caballero
Associate Professors of Economics at the Universidade de Vigo, Spain
David Soto-Oñate
Associate Professors of Economics at the Universidade de Vigo, Spain
Brazilian Journal of Political Economy, Vol. 36 No. 2 (2016), Apr-Jun / 2016, Pages 330-352

Abstract

The New Institutional Economics, led by four Nobel laureates (Ronald Coase, Douglass North, Oliver Williamson and Elinor Ostrom), has showed that institutions and organizations are a medium for reducing transaction costs and obtaining a higher efficiency in economic performance. This paper goes into the research program of the New Institutional Economics to explain the relevance of transaction costs in political exchange and organization and show that transactions costs are even higher in political markets than in economic markets. The paper reviews the main contributions on institutions, transaction costs and political governance, and provides some lessons on political transacting and governance. The survey includes the most detailed catalogue of political transaction costs that has ever been published.

JEL Classification: B52; P48.


Keywords: political exchange transaction costs institutions political organization governance