Transaction Cost Economics

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Transaction cost economics (TCE) is an economic model used to analyze the costs of a given transaction and how these costs are interrelated. Some TCE economists suggest that the costs incurred through market transactions can often favor hierarchies or governments. There are numerous costs that result from making a transaction, including search and information costs, bargaining costs and enforcement costs among others. TCE studies these costs and is used today to explain a variety of different factors that affect transactions by analyzing their frequency, specificity, uncertainty, limited rationality along with opportunistic behaviors during transactions.


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