What factors influence changes in transaction costs. Transaction costs of a Russian enterprise: factors and measurement Serebryakov Fedor Anatolyevich
MINISTRY OF EDUCATION OF THE RF
KEMEROVSK STATE UNIVERSITY
FACULTY OF ECONOMICS
DEPARTMENT OF ECONOMIC THEORY
COURSE WORK
On the topic “Transaction costs and their impact on the functioning of the market”
Coursework Coursework
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Kemerovo, 2007
PLAN
Introduction…………………………………………………………………………………pp.3-4
Chapter 1. Transaction costs as a special type of cost in production and consumption………………………………………………………………………………...page 5
1.1. The essence of transaction costs…………………………..pp.5-7
1.2. Types of transaction costs……………………………..pp. 7-15
Chapter 2. Features of the economic system of the Russian Federation………………..page 16
2.1. The concept of “transition economy”, distinctive features and patterns………………………………………………………………..p.16-18
2.2. Features of the transition economy in Russia, its main tasks and ways to solve them…………………………………………………………….....p.18-24
2.3. Transaction costs in a transition economy………….pp.24-33
Chapter 3. Transaction costs and their impact on the functioning of the market…………………………………………………………………………………..p.34
3.1. Transaction costs as a barrier to entry into the market for small businesses……………………………………………………………....pp.34-44
3.2. Transaction costs of overcoming administrative barriers – economic losses of society……………………………………pp.44-52
3.3. Transaction costs at the micro level – low rates of individual savings………………………………………………………...pp.52-60
Conclusion…………………………………………………………….....pp.61-63
List of used literature…………………………………...pp.64-65
Introduction
During the transition to a market economy, the role of institutional changes was underestimated. Accelerated privatization, not complemented by a policy of targeted formation of economic institutions, could not overcome the incentives and stereotypes of non-market behavior, and could not create an effective management system. As a result, an inefficient structure of the Russian market emerged, inter-industry connections were destroyed, and industry proportions were deformed.
Inefficient market structure is closely associated with high transaction costs. They make up a significant share of the gross domestic product, while a large role is played by various intermediary structures that do not perform their function quite effectively, thereby slowing down the process of economic growth and directing it along an extensive path of development.
Transaction costs are the reason for the formation of ineffective socio-economic institutions, a source of deformation, monopolization of the market structure, and also impede the formation of a developed capital market, which becomes a factor in the conservation of an inefficient industry structure with a predominance of low-level industries, weak development of small and medium-sized businesses, and lack of incentives for innovation and investment.
Reducing transaction costs and changing their structure is a necessary condition for the formation of a flexible and balanced market structure, focused on scientific and technological progress, rational use of limited resources, and sustainable growth. Therefore, it seems relevant to identify the mechanism of the relationship
transaction costs and market structure, analyze the effectiveness of the formed socio-economic institutions.
The concept of transaction costs is developed by the institutional direction of modern economic theory. Significant contributions to it were made by R. Coase, M. Olson, A. Alchyan, O. Williamson, D. North, S. Winter, J. Hodgson, K. Polanyi, H. Demsetz, T. Eggertson and others. From domestic scientists Those who are actively and fruitfully developing this area include R. Kapelyushnikov, V. Kokorev, S. Malakhov, A. Nesterenko, A. Oleynik, V. Polterovich, V. Radaev, A. Shastitko, G. Yavlinsky and others.
However, in general, this area is one of the least developed. There is no clear theoretical interpretation of the concept of transaction costs. The structure and dynamics of transaction costs on the Russian market have not been studied, and the methodology for their assessment and measurement is insufficiently developed. The direction and degree of their impact on the institutional environment and the structure of markets have also not been studied. The place and role of transaction cost theory among other economic disciplines remains the subject of fascinating and fruitful debate. The insufficient level of development and undoubted practical significance determined the topic of this work.
The purpose of this work is to identify the economic and social foundations of the formation of transaction costs in a market economy, as well as to theoretically study the mechanism and results of the impact of transaction costs on the institutional environment and market structure. The stated goal determined the following research objectives:
Analyze the classification of transaction costs;
Conduct a theoretical analysis of the processes of interaction between transaction costs, institutional structure and market structure;
Consider the main problems in the transition economy of Russia related to transaction costs.
Chapter 1. Transaction costs as a special type of costs in production and consumption
1.1. The essence of transaction costs
The company spends considerable resources and efforts to assess the parameters of goods that are significant to it, control partners and enforce agreements. Sureties, guarantees, trademarks, sorting and classification costs, timekeeping, hiring of agents, arbitration, payment of intermediaries, and costly legal processes all reflect the pervasive nature of transaction costs in an economic system.
The discovery of the true meaning of the phenomenon of transaction costs, made in 1937 by the American economist R. Coase, changed scientists’ understanding of the market economy and predetermined the direction of the subsequent development of economic science, largely turning it towards practice.
Transaction costs are understood as the costs of interaction between economic entities. This type of cost includes any necessary expenditure of resources that are not directly aimed at the production of economic goods, but ensure the successful implementation of this process.
Moreover, the category of transaction costs is broader than just a type of firm’s costs. Many transaction costs appear not at the firm level, but at the level of society as a whole. What other than the costs of interaction between economic entities are, for example, the costs of the state for the maintenance of arbitration courts resolving economic disputes. Transaction costs are a whole layer of economic life that is found everywhere and determines the essence and forms of many processes.
Where do transaction costs come from? This question cannot be answered in monosyllables. The first most important source is the cost of acquiring information. Any information that subjects require in the process of production, exchange and consumption is obtained at the cost of certain efforts.
When we act as a consumer, we are interested in the presence and degree of manifestation of valuable properties contained in a given good, as well as information about prices in the market for this product and in the markets for substitute goods. The cost of searching for relevant information will be measured mainly in time spent.
The most valuable information for a manufacturer includes data on the presence and magnitude of demand, consumer tastes, modern technologies, and the behavior of competitors. Obtaining this information is mainly related to the remuneration of the company’s employees, as well as the remuneration of intermediaries, payment for consultants’ services, etc.
The second source of transaction costs is the selfishness of economic subjects or opportunism, i.e. the tendency of people to behave selfishly to the detriment of others. Opportunism manifests itself in concealment of information, its deliberate distortion, deception, avoidance of work, and fraud.
Moreover, it is quite difficult to unravel the bad intentions of partners. The world is structured in such a way that information is distributed unevenly, and a manager cannot easily obtain all the data that his counterparty uses.
Third: the analytical capabilities of economic entities are not limitless. People and firms are limitedly rational. This means that the subject does not choose the objectively optimal solution for himself, but only the best of those that he could find. The fact is that a manager, like a consumer, cannot instantly analyze all the data and make the optimal decision.
The existence of transaction costs is thus predetermined by a group of subjective factors. Objective factors greatly enhance this effect due to:
A constant increase in the number of transactions (as a result of the development of specialization and division of labor);
General uncertainty characteristic of the economy (it is difficult to plan anything in an environment that is dynamically changing under the influence of many factors);
The presence of transaction costs at the national level.
1.2. Types of transaction costs
To complete a transaction, an agent may be required to perform many different operations. Each of them can be very expensive and be accompanied by errors and losses. Hence the variety of types of transaction costs. There are a number of approaches to the classification of transaction costs.
1. Transaction costs accompany both production and consumption. Goods and services, as D. North emphasizes, have many properties, the degree of manifestation of which varies from one instance to another. Assessing the manifestation of the desired properties is fraught with costs. As a result, subjects are forced to expend effort not only in the process of production activities, but also in the process of consumption. Accordingly, it is legitimate to divide transaction costs into consumer transaction costs and production transaction costs.
It is appropriate to recall here that not only individuals, but also companies act as consumers. Therefore, each firm directly bears both of these types of costs. For example, incoming quality control of raw materials can be classified as consumer costs, and advertising can be classified as production transaction costs.
2. Further, a firm's transaction costs can be fixed or variable. Variables include costs that grow with an increase in the number of transactions: costs of control, decision-making, as well as costs associated with negotiations and information search, etc. Constants do not depend on the volume of transactions and consist primarily of the costs of creating and maintaining transaction management structures: these are the costs of organizing new departments within the company or registering and “launching” “subsidiaries” for the development of new business, etc.
At the macro level, an example of constant transaction costs can be the costs of transferring the economy to “market tracks”. Society must incur enormous costs in terms of creating legislation, law enforcement, business customs, and unwritten rules to ensure that any transaction proceeds within certain limits. Sometimes in this sense they talk about the existence of transaction capital used to finance transaction costs. It consists of fixed (investment transaction) and working capital. The first is necessary to create free markets, firms, and political structures. The second is to finance the day-to-day costs that arise in the operation of markets and the political system.
3. Regarding the moment of concluding a contract, a distinction is made between costs preceding the transaction (exante) and those arising during the transaction (ex post). The first include the costs of finding a partner, drafting a contract, conducting negotiations and providing guarantees for the implementation of the agreement. The latter are associated with the imperfection of the dispute resolution mechanism and occur in several forms. Firstly, these are the costs of adapting the contract to unforeseen events, secondly, the costs of litigation or private settlement of disputes in the event of its failure, thirdly, all other costs associated with ensuring the interests of the company in the course of fulfilling contractual obligations .
The main difference between ex ante and ex post costs is that ex ante costs are planned in advance and represent an acceptable cost of interaction for the parties, while ex post costs often arise unforeseen. These losses of the parties that are not taken into account in the price sometimes put the business at risk of failure.
4. A special place in the classification of transaction costs is occupied by costs associated with specific assets and agency relationships.
Indeed, a certain part of capital takes the form of specific assets. They differ in that they are needed specifically in a given transaction or in a transaction with a specific partner (unique equipment that has no alternative use, special skills of workers, etc.). While they have higher productivity than general purpose assets, they also pose increased risk to their owner. After all, if the contract is canceled, they cannot be used for other purposes or sold at real value.
The specificity of assets, in turn, leads to the emergence of transaction costs. Since a company has acquired something that cannot be sold at a “normal” price, it is forced to “protect” its specific asset. More specifically, it tries to bind partners with a long-term contract, collateral, guarantees, and they, naturally, agree to such restrictions on their freedom for free. These are additional transaction costs that arise for both parties who have entered into a transaction involving specific assets.
5. Agency relationships arise when one party (agent) acts on behalf and on behalf of another (principal). In this case, the agent can sometimes ignore the interests of his principal. There are many examples of such behavior: “shirking” from conscientiously performing duties, concealing information, abuse of authority, etc.
The principal, knowing about the theoretical possibility of dishonest behavior by an employee, will try to limit his freedom of action. The most proven method is to organize, at a certain cost, a system of control and coercion of the hired agent. The latter, for his part, may consider it profitable to incur certain costs in order to convince the principal of the impeccability of his intentions. For example, voluntarily freeze part of his own fee as a security deposit, which will be returned to him only if the principal recognizes the work performed in good faith. The result of this is the so-called residual losses, i.e. costs of deviation of an agent's business behavior from optimal. Thus, agency costs are the sum:
Residual losses;
Control costs on the part of the principal;
Costs of providing guarantees on the part of the agent.
6. Finally, depending on the mechanism of origin of transaction costs, they are distinguished:
Internal (managerial);
External (market);
Political (costs of the political market).
External costs. Describing market costs, R. Coase noted that they stem from the need to find out with whom you can make a deal, approach the counterparty with your proposals, negotiate, draw up a contract, make sure that its terms are acceptable, etc.
Reasons for the emergence of market costs: on the one hand, the market is characterized by a state of uncertainty. Subjects are not fully informed and have to figure out who can buy or sell a particular product and under what conditions. On the other hand, many market transactions are not impersonal. If the parties decide to enter into a transaction, they need to learn more about each other and assess, as far as possible, the counterparty’s ability to successfully fulfill its obligations. Negotiations (sometimes with the participation of lawyers) are necessary to develop acceptable contract terms. In addition, monitoring measures are required throughout the entire transaction, and in the event of attempts by a partner to evade the fulfillment of its obligations, actions must be taken to force it (within the framework of the current “rules of the game”) to comply with previously accepted conditions.
Market costs can be classified more strictly as follows:
1) costs of preparing the contract (search for information);
2) costs of persuading a partner to complete a transaction (advertising, sales promotion, etc.);
3) costs of concluding a contract (negotiations and acceptance
decisions);
4) costs of monitoring the execution of the transaction and defending
their interests.
Let's look at each of these types of costs.
Costs of searching for information. A subject who wants to make a deal is forced to search for a partner, and this search necessarily causes costs. In general, there are four groups of costs associated with information and its search:
1) the costs of searching for information about prices and preferences of suppliers and buyers of a particular product;
2) costs associated with communication between the parties (postal, courier, telephone costs, rental of meeting rooms, etc.);
3) costs for testing and quality control;
4) costs of recruiting qualified personnel.
The first item of expenditure deserves special attention. Finding information about suppliers and clients is one of the significant problems of a modern company. For example, if a manager is going to promote a new product to the market, he needs to understand what exactly the buyer wants from this product (which properties of the product are most important to him). There may be several possible answers: most products have a lot of quality parameters, among which there are probably decisive ones. In addition, the simplicity and speed of purchase, level of service, consistency of quality and much more are important. In order to find out which criteria have the greatest influence on a buyer's choice of a product, special marketing research may be required, including interviews with potential customers and other methods. After this, a hypothesis is put forward, tested, and a decision is made.
Such work, as a rule, is ordered by companies from specialized marketing agencies and is not cheap.
Costs of convincing a partner. The costs of convincing a partner to complete a transaction are caused by the demand-limited nature of a market economy. Effective demand is the only “intra-system” deficit, an integral property of the market with which the company has to deal. Therefore, it is not enough to find the optimal partner. It is necessary that he conclude a deal with your company.
The main costs associated with this consist of: 1) sales promotion, 2) advertising, 3) public relations system.
A sales promotion offers the buyer some material benefit from the transaction. Advertising seeks to persuade a partner to complete a transaction by offering him indirect benefits. Finally, good public relations is not aimed directly at increasing sales, but at improving overall consumer attitudes towards the company and its products. That is, they create a favorable climate or background for making a transaction.
Costs of negotiations and decision making. Negotiation and decision-making costs arise when the essence of the transaction is approximately clear and the parties bargain, trying to get the most favorable conditions for themselves and protect themselves from surprises. These costs constitute a significant expense item, if only because negotiations and decision-making are the functions of the company's highest paid employees. Working time, which they spend mainly in meetings and conferences, is the main direct item within this cost category.
Costs of control and coercion. Having a signed contract with a partner does not guarantee automatic fulfillment of obligations under this contract. Regardless of who the counterparty to the transaction is, the company must monitor compliance with deadlines, compliance with quality parameters, supply volumes, etc. All these activities are carried out at the expense of the company by its employees or invited specialists. In any case, control and coercion are an integral and very important part of business.
An example is the control over taxpayers by the state. To check the correctness of tax calculations, timeliness and completeness of their payment, the state has to maintain a solid apparatus consisting of experts (tax workers) and “siloviks” (tax police). The funds allocated for the operation of these services are very significant. Nevertheless, the expenses pay off, since the desire of economic entities to pay taxes decreases with the tightening of control procedures.
Internal costs. Internal (managerial) transaction costs are associated with intra-company transactions. Most of them arise during the implementation of labor contracts concluded by the company. Management costs in this case will be expressed as follows:
1 . In pacxods for building, maintaining and improving the organizational structure of the company. These expenses are associated with a whole range of operations: personnel management, investments in information technology, PR, lobbying. Typically these are fixed transaction costs.
2. In the costs of current management of the company. These are usually variable transaction costs. Two subgroups of such costs can be distinguished:
a) information costs - company costs associated with decision-making, monitoring and control of the execution of orders, checking the fulfillment of official duties of employees, agency costs, information processing costs, etc.;
b) costs associated with the physical movement of goods and components along technological chains. An example would be intra-company overhead costs: transportation and other costs associated with the movement of unfinished products.
Political transaction costs. Market rules of the game are not created in a vacuum. On the contrary, they are based on a specific political platform that is compatible with the capitalist market and capable of supporting its operation. The creation and operation of this structure, as well as the public goods it reproduces, require costs. Their nature is similar to the nature of managerial transaction costs, but they manifest themselves not within the company, but at the level of the entire country: to some extent, they can be considered agency costs, i.e. at the cost of interaction between the principal and the agent.
Political transaction costs, in particular, include the following:
1. Costs of creating and maintaining power structures. They include the costs of creating a legal system, executive and police apparatus, courts, etc. In addition to them, this includes such important elements of the political superstructure as parties, social movements and lobbying structures that are directly involved in the political game.
2. Current costs of the political system. This category includes expenses associated with the government’s fulfillment of its obligations to society: protecting the legal rights of economic entities, ensuring national security, performing arbitration functions, maintaining public education, healthcare, etc. Similar to the private sector, the state, when performing its functions, faces the costs of searching for information , making decisions, issuing orders, monitoring their execution. Finally, the costs of negotiation and compromise between different groups of the population, as well as between them and the government, cannot be ignored.
Contrary to its name, political transaction costs are not only necessary from a political point of view. Even in developed democratic societies, when interacting between economic entities, forms of behavior such as deception and fraud remain beneficial, so a “third force” that performs the functions of an independent arbiter and policeman is very important. The market today cannot exist in isolation from the political system; accordingly, the costs that are caused by its operation inevitably fall on the economy.
Let us pay attention to the alternative nature of different types of transaction costs. An entrepreneur can choose a completely legal scheme for doing business, use all government mechanisms for protecting his property rights and at the same time bear all the burdens of financing political costs (mainly in the form of taxes). Or maybe choose a gray or completely black scheme, not incur political costs, but also protect your property exclusively with your own resources.
Chapter 2. Features of the economic system of the Russian Federation
2.1. The concept of “transition economy”, distinctive features and patterns
The Russian economy today is characterized as a transition economy, which determines the characteristics of the development of our country. To identify the distinctive features of a transition economy in Russia, its main problems and ways to solve them, we first define the general concept of such an economy.
A transitional (transitive) economy is an economy in which the most important thing, unlike any “become” mature economy, is not the simple functioning of existing connections and elements, but the “withering away” of old ones and the formation of new connections and elements. A transition economy characterizes an intermediate state of society, when the previous system of socio-economic relations and institutions is destroyed and reformed, and a new one is just being formed. The changes taking place in a transition economy are predominantly changes in development, rather than in functioning, as is typical for the existing system.
A transition economy is a mixture of elements (relations, connections, institutions) of centralized and modern market systems. Elements of a market economy of free competition and a traditional economic system are sometimes added here.
By its nature, this is a special state in the evolution of the economy, when it functions precisely during the period of transition of society from one historical stage to another, in a turning point, an era of economic, political and social transformations. Hence the special nature of the transition economy, which distinguishes it from the “ordinary” economy of one or another stage, and the specific patterns of its functioning, among which two most important ones can be distinguished:
· inertia of the reproductive process;
· intensive development of all new forms, elements, institutions.
The first regularity (feature) of the functioning of a transition economy is associated with the continuity (inertia) of the reproduction process, which excludes the possibility of quickly replacing existing economic forms with other, desirable ones. Such actions would inevitably bring chaos to the production process. It is the inertia of reproduction that presupposes such a feature of the functioning of a transition economy as the preservation of old economic forms and relations for a sufficiently long period.
Another regularity (feature) of the functioning of a transition economy is the intensive development of all new forms and relationships. Understanding the irreversibility of the evolutionary process, as well as its main trends, makes it possible to accelerate it through the implementation of one or another reform program. The role of the subjective factor, on which the correct choice of directions and paths of development, and its practical implementation depends, is sharply increasing. The success of accelerating transition processes is ensured if reforms are planned not arbitrarily, but on the basis of knowledge of the laws of evolution and the construction of a system of actions in appropriate directions.
Main features of a transition economy:
· firstly, variability, instability, which do not just temporarily disrupt the stability of the system so that it then returns to an equilibrium state, but weaken it. It is gradually giving way to another economic system. This instability, the instability of the state of the transition economy determines, on the one hand, the special dynamism of its development and the corresponding nature of changes - irreversibility, non-repetition, and on the other - the growth of uncertainty in the development of the transition economy, options for the formation of a new system;
· secondly, the emergence and functioning of special transitional economic forms, i.e. a mixture of old and new. Transitional forms indicate, on the one hand, the existence of a transition economy, on the other hand, they indicate the direction of this transition and are a sign of its irreversibility;
· thirdly, the alternative nature of the development of the transition economy, which really means the possibility of multivariate economic development and the choice of the most favorable development option;
· fourthly, the special nature of contradictions in a transition economy. These are contradictions not of functioning, but of development, i.e. new and old, contradictions between different layers of society behind certain subjects of economic relations. The changes that the transition era is aimed at always have a revolutionary character in the economic aspect: we are talking about a change in economic systems. But also in socio-economic terms, transitional eras are often accompanied by such a sharp aggravation of contradictions that they are associated with revolutions and socio-political upheavals;
· fifthly, the historicity of the transition economy, which is associated with two circumstances. First of all, the very conditions of a transition economy are historical in nature; In addition, the historicity of the transition economy depends on the characteristics of the region, as well as on the individual country, which means that even the known patterns common to the transition economy manifest themselves differently in different conditions.
All these features must be taken into account when developing programs for reforming the economic system during the transition period.
2.2. Features of the transition economy in Russia, its main tasks and ways to solve them
The main distinguishing feature of the transition period of the Russian Federation is the historical unprecedented nature of the transition, which acts as a transition to a modern market economy not from a traditional one, but from a special one that existed in a relatively small number of planned economies. The “socialism” of the planned economy is the defining characteristic of the initial state of modern transition processes in Russian society. The socialist system of values and orientation that has been formed over decades continues to manifest itself in the action of not only economic factors (determining the difficulties and uniqueness of economic reform), but also non-economic ones, which are especially important in transition states.
Russia is a pioneer and must solve problems unknown to this point in time. The uniqueness of Russia's problems means that solutions cannot rely on any “specific models” developed for transition processes.
In addition, Russian society today, on the path of reformist development, must carry out a “return” movement towards the effective use of market relations with all their attributes, a variety of forms of ownership, the development of entrepreneurial activity, etc.
The transition process in Russia is taking place in special historical conditions - the conditions of unfolding global transition processes.
Global transition processes in the world cannot but influence the Russian economy, the content of transition processes, and their final guidelines. In this sense, the transitional Russian economy is an interweaving of unique local and certain universal trends. Creating a new type of economic system that overcomes the shortcomings of the previous one and ensures increased economic efficiency is a rather complex process. The complexity is due not only to the enormity of the tasks of reforming the existing economic system, but also to the need to simultaneously overcome crisis phenomena that have worsened as a result of society's entry into a transition economy. In this regard, the main tasks of Russia's transition economy are as follows:
1. Economic liberalization is a system of measures aimed at the abolition or sharp reduction of prohibitions and restrictions, as well as state control in all spheres of economic life.
2. Demonopolization of the economy and the creation of a competitive environment, involving the creation of equal opportunities and conditions for business activity of all economic agents (ensuring access to the market for foreign competitors, encouraging small businesses and reducing barriers to entry into the industry, etc.).
3. Structural transformations aimed primarily at eliminating or mitigating imbalances inherited from the previous system in the sectoral structure of the national economy and its individual sectors.
4. Macroeconomic stabilization (mainly financial), which requires suppressing inflation, limiting money emissions, minimizing the state budget, etc.
5. Formation of a strong system of social protection of the population, which is aimed at the transition to targeted social support for the most needy segments of the population and should facilitate part of the population to adapt to the conditions of a market economy.
6. Institutional transformations, including changes in property relations (creation of the private sector), the formation of a market infrastructure, the creation of a new system of state regulation of the economy, the adoption of economic legislation adequate to market conditions.
In modern Russia, grandiose social experiments in institutional transformations are being carried out. Their cause was the deformation of the institutional structure, caused by the activities of socio-political forces that did not have an adequate theory of the dynamic development of the country.
The content of the deformation of the Soviet period was a violation of the institutional balance, that is, the optimal ratio of basic and complementary institutions. The institutions of the X-matrix were totally dominant - the redistributive economic complex, unitarism in politics and the dominance of communitarian values in ideology that suppressed individual values. This meant that the use of the objectively necessary principle of matrix replication, that is, the completion of the institutional structure of society with complementary institutions of the U-matrix (a combination of economic institutions of the market, political institutions of the federation and subsidiary values, which enshrines the priority of I over we), was artificially restrained and blocked. But the laws of institutional self-organization cannot be abolished, and therefore the alternative elements that inevitably emerged under these conditions were latent, illegal, or monstrous in nature. These were exchange relations in the “black” and “gray” markets, separate activities of local authorities, which actually separated the economic and political life of entire regions from the life of the country, dissident movements to protect human rights in the ideological sphere, etc. In other words, politics during this period blocked the mechanism of self-assembly of an institutional structure with equally necessary basic and complementary elements. Such a social organism could not be viable, which manifested itself in a deep systemic crisis.
The beginning of market reforms in the 1990s was also characterized by the lack of adequate theoretical concepts among the socio-political forces that carried them out. The political economy of socialism went bankrupt; there were no other convincing domestic developments. Therefore, theories borrowed from Western countries, characterized by the dominance of the Y-matrix, were adopted. The fairly high level of their socio-economic development served as the main argument in favor of the concepts developed by scientists in these countries, and by practitioners - specific measures. But the fact that these theories reflected the peculiarities of the institutional development of the countries where they were created was not taken into account. Therefore, the theoretical basis for the transformations carried out in Russia were concepts that consolidated the dominant position of the U-matrix institutions in the social structure. The goal of the reforms was the formation of a market, the introduction of federal principles of political structure, as well as ensuring human rights and other personal values in the ideological sphere. It was assumed - and actively carried out - to replace the basic X-matrix with a complementary Y-matrix.
In such an environment, the X-matrix inevitably occupies a leading position, since it is its institutions that more reliably ensure the reproduction and development of society as a whole, rather than individual social groups. Therefore, in the process of reform, borrowed elements were partially rejected as inadequate and socially unacceptable, and partially modified during implementation and integrated into public life in such a way that they often served opposite purposes compared to those for which they were originally borrowed. As evidence, let us consider two processes that are significant for modern Russian society - administrative reform and the transformation plan of RAO United Energy Systems of Russia (RAO UES).
It is known that the most important declared goals of administrative reform were the decentralization of management and the implementation of the principle of separation of powers. As it was implemented, its objectively necessary meaning became more and more obvious - the creation of a control system that was adequate in principles, complexity and structure to the controlled system. And it was this meaning, and not declarative goals, that began to determine the course of the reform and the set of specific measures. Thus, unexpectedly for adherents of the liberal course, federal districts arose, to which part of the powers of the federal center, primarily the executive branch, was delegated. The new structure of federal executive authorities, introduced by decree of the President of the Russian Federation of March 9, 2004 and adjusted by his decree of May 20, 2004, also modified the original plan. Firstly, it retained the sectoral management principle. Secondly, the vertical subordination of the structures introduced by decrees remained. Services and agencies are under the jurisdiction of ministries (or directly subordinate to the president or government of the Russian Federation), while in countries with a U-matrix they are elements of civil society, that is, for the most part they have an independent status. Thirdly, the practice of appointing (control from above) all heads of federal executive districts has become stronger. At the same time, this reform made it possible to make the work of all designated structures more transparent and controllable, since the rights and responsibilities of the elements of the new structure were clearly defined. Ministries are considered to be law-making bodies, since they have the authority to prepare bills and issue regulations, and the tasks of agencies and services are to carry out decisions of ministries and carry out special supervisory functions. Thus, administrative reform, in essence, strengthens the power vertical, promotes a clearer distribution of functions, rights and responsibilities between levels of hierarchical management and generally strengthens the economic-political institutional complex inherent in the X-matrix.
If you carefully analyze the progress of reform of RAO UES, you can also discover interesting trends. As is known, the company's management is actively pursuing corporatization and privatization of the energy complex and the formation of a free electricity market. They are offered a number of measures to create new holding structures and divisions within RAO. But the seemingly complex and bizarre pattern of company reform contains an obvious pattern. Firstly, the hierarchical vertical of the energy sector, opened during the “first privatization,” is being recreated (through the system of parent companies and share ownership structure). Secondly, as in the process of administrative reform, activities are separated with clear powers and responsibilities within the same hierarchical structure. Finally, thirdly, during the reform, a search is being made for an effective balance of market redistributive institutions. On the one hand, there are areas where state property and its inherent mechanism of centralized economy are preserved - this is mainly the energy grid complex. On the other hand, the sphere of dominance of market institutions and private business entities is determined - generating companies, that is, energy producers, will presumably be included in it.
These two examples show how ongoing transformations modernize institutional forms, but evolutionarily continue the trajectory of the country's development with the dominance of X-matrix institutions. The institutions of the Y-matrix are integrated into the Russian system as necessary and conducive to its dynamic development, but their action is increasingly mediated, determined, and limited by the action of the institutions of the basic X-matrix of the Russian state.
Thus, the evolutionary modernization of the modern transition economy of Russia means the development of its inherent institutional order. Such modernization assumes that practice has found new forms of expression for the economic mechanisms characteristic of the institutional X-matrix of the Russian state. Redistribution institutions maintain and strengthen their leading position, while they are “fertilized” by the practice of market reform. Market elements complement the Russian redistribution economy. Firstly, they are integrated into the structure of new institutional forms (for example, large monopolies in the form of joint-stock companies with dominant state participation). Secondly, commercial structures compensate for “redistribution failures” by acting alongside or instead of traditional government agencies. We are talking primarily about the areas of trade, catering, repair and maintenance, etc.
2.3. Transaction costs in a transition economy
According to a number of experts, the problems of the Russian economy are largely related to high transaction costs. The Russian economy has already reached a point where “transaction servicing consumes enormous resources,” but is struggling to move to a phase where “productivity associated with gains from trade will increase even more.”
The lack of necessary elements that reduce the level of transaction costs is one of the biggest problems of a transition economy. In particular, rapid changes in the political sphere inevitably lead to serious gaps in the legal infrastructure. In a “turbulent” society, the level of mutual trust is also low. As a result, transaction costs begin to predetermine a lot in such an economy: their gigantic size not only inflates prices, but also slows down the development of new markets and erects barriers to investment.
Huge environmental resistance leads to the fact that the economy responds to all incentives slowly and reluctantly. Firms stubbornly exploit obsolete production assets and are in no hurry to satisfy existing effective demand. And it is no coincidence: if you calculate commercial operations taking into account transaction costs, many of them will turn out to be unprofitable.
We find evidence in favor of this thesis in everyday life. Perhaps the most striking of them is the high cost, typical for Russia, with a still low level of quality of goods and services (in 2002, Moscow took second place in the list of the most expensive megacities in the world). Moreover, in the form of unjustified high prices, this problem is typical for the most prosperous domestic markets. Many secondary markets simply do not exist, since transaction costs have set a barrier to entry into the industry. This deprives us of a large number of benefits of civilization.
Any potential participant in such a market will face the following problems:
1) there is no reliable protection of the enterprise and its clients from crime;
2) the tax pressure is too great;
3) there are no reliable suppliers, since many other markets are not developed (high costs of searching and concluding supply contracts);
4) there is no qualified personnel (the cost of finding the necessary specialists);
5) there is no mechanism for resolving disputes (costs of coercion);
6) the monetary system is underdeveloped or unstable, which complicates settlements with all counterparties.
The least developed markets are those that are most dependent on the normal functioning of the transaction mechanism. An interesting example of this type is the loan capital market in Russia. The underdevelopment of collateral legislation and the lack of effective ways to hold unscrupulous borrowers accountable lead to an increase in interest rates and a marginal reduction in borrowing volumes.
Certain market segments (for example, interbank lending) are hardly developing. The problem that subjects face is similar to that of the elderly insurance market. At high interest rates, those banks that lack liquid assets will most likely act as borrowers. It is almost impossible to find out the true financial condition of the borrower; therefore, risk arises. The result is a market fiasco: an almost complete absence of interbank lending.
The shadow sector can be considered a special zone in a transition economy, in which many small and medium-sized entrepreneurs prefer to work. The peculiarity of their situation is that the legalization of business is hampered by high costs (associated mainly with taxes).
However, remaining in the shadows, the company finds itself in that area of the economy where transaction costs reach their maximum. The state almost completely withdraws from its functions of “arbiter” and “policeman”. Accordingly, no one guarantees shadow entrepreneurs their property rights. The company's rights under contracts are also not secured in any way. Subjects must solve these problems themselves and bear the corresponding costs. Under these conditions, investments become extremely risky and unprofitable. There are difficulties with lending. In addition, such a business is very difficult to sell: the new owners of the company cannot be sure of the legitimacy of the rights to the acquired assets. As a consequence, firms remain minimal in size, despite the potential benefits of economies of scale.
The concept of transaction costs allows us to explain why in “transition countries”, with a low capital-labor ratio, there is little investment.
The fact is that investments in a developing market are blocked by high transaction costs: potential benefits are instantly eaten up by all sorts of unproductive expenses (bribes, delays, agency costs, protection of company property, etc.). In addition, investments in a transition economy are accompanied by the highest risks, which are caused primarily by the expectation of uncertain transaction costs at the post stage of the project. Indeed, if you look at a developing market through the eyes of a potential investor, the following typical problems become apparent:
1. Changes in legislation. In a transition economy, laws change constantly. Accordingly, there is an increased risk of revising the rules of the game to the disadvantage of the owner.
2. Vagueness of the legal field. Typically, in developing countries, legislation is structured in such a way that a lot is left to the discretion of the official (it is not laws that rule, but people). This significantly increases uncertainty and increases the risk of any investment.
3.Weak enforcement mechanism. If certain rules are established for the economy, then it is also necessary to provide for a mechanism for their enforcement (coercion). In countries with economies in transition, laws are often simply declared, but not guaranteed. In order to practically ensure the observance of one’s rights, it is necessary to incur certain expenses (for example, to bribe an official for an expedited resolution of an issue that he is already obliged to quickly resolve).
4. Risk of illegal attacks. This feature is a consequence of the previous problem. The danger of illegal encroachment comes not only from competing entities, but also from officials (a manifestation of corruption) and the state (in the form of nationalization).
5. Opacity of reporting. Agency costs have already been discussed above. They arise with the separation of the functions of the owner of the company and its manager. An investor who is not directly involved in the work of the company must be able to control the actions of his agents (management). In developed countries, the emergence of new modern accounting and auditing methods has reduced the previously high costs of obtaining information and monitoring business transactions. Firms have become transparent to their owners. In a young market, this problem still persists.
The listed factors force subjects to switch to less capital-intensive and shorter projects. Thus, they are deprived of the opportunity to benefit from large long-term investments in productive capital, which are associated with such impressive successes of the modern market economy. Thus, high transaction costs and lack of long-term investment lead to numerous negative consequences.
In developed countries, a significant share of transaction costs is caused by an increase in the number of potential subjects of economic relations, and, consequently, the number of transactions carried out by them. In countries with transition economies, the high level of transaction costs is also due to the fact that the mechanism of interaction between government agencies and business entities has not yet been developed.
For the Russian economy, the costs of institutional transformation are a significant component of transaction costs. Many features of the transition period are largely determined by these costs. Their essence lies in the fact that when an institution changes without connection with the transformation of rules for other institutions, a dead end is created in solving current problems. We are talking about the lack of necessary coordination of macroeconomic regulators.
An ineffective stable norm (ineffective institution) is called an institutional trap. For example, the development of barter in mechanical engineering was accompanied by a corresponding drop in profitability. The stability of an institutional trap means that with small disturbances the system remains in the institutional trap, only slightly changing its parameters, and returns to its previous state when the source of the disturbance is eliminated.
The existence of institutional traps largely determined the specifics of the market transformation of the Russian economy. The changes taking place in recent decades in Russia and other countries of the former USSR form rich empirical material. Reforms aimed at the best liberal goals gave such contradictory results that it turned a theoretical paradox into a very real problem: the abolition of planning led not to an increase in production, but to its deep decline; the destruction of the system of comprehensive control over the population did not lead to the formation of a free civil society, but to the growth of criminal and deviant behavior; the abandonment of the monopoly on foreign trade resulted in a spontaneous export of capital and natural resources.
In large-scale reforms, the costs of institutional transformation are borne by both the state budget and individual firms.
Transaction costs are borne by legal entities and individuals conducting economic activities within the framework of established institutions, while the state is not burdened with such costs. With large-scale restructuring, the costs of institutional transformation fall on both individual economic participants and the state. This is one of the main differences between the two types of costs. Another important difference is that the former falls under the category of ongoing non-production costs, while the latter falls under the category of non-recurring (capital) costs. This means that transaction costs are permanent in nature and their burden always weighs on the enterprise, and transformation losses arise only periodically - at moments of change in the company’s interaction with the outside world. Any transformation, especially a large-scale one, leads to one degree or another to disorganization of the system, which aggravates the costs of adaptation.
Neoliberal theory (which underlies shock therapy) ignored the costs of institutional transformation, not allowing even the thought that the construction of a new design of the economic mechanism might be beyond society’s means. Of course, it is difficult to accurately calculate the costs of institutional transformation. However, by the beginning of 1992, there was already experience from Poland, the Czech Republic and Hungary, which could serve as a guide for the former republics of the USSR.
The real cost of reforms in Eastern European countries and former post-Soviet republics is still waiting to be assessed. There is no doubt that it is huge. After 8-10 years of reform, by 1998, only two of the 25 countries (Poland and Slovenia) had reached the pre-reform level of GDP. At the same time, in most CIS countries the decline in GDP exceeded 40%. Only in Uzbekistan, where the reforms were the least radical, this figure was about 15%.
It is known that the rate of growth (or decline) of GDP for reforming economies significantly depends on the initial conditions. Analysis of the costs of institutional transformation allows us to explain the mechanism of this dependence. The worse the initial quality of institutions, the more investment is diverted to their improvement; The further the system is from equilibrium, the longer the transition process and the greater the losses from disorganization. The distance from equilibrium means a large scale of redistribution of transition rent, which means large losses due to the struggle for it.
Due to the large number and variety of types of institutional traps in transition economies, there is a need to classify them. Having ranked the traps by level of importance in society, we obtain the following distribution:
1. The trap of adaptation economics;
2. Shadow economy;
3. Corruption;
4. Administrative barriers;
5. Tolling;
6. The trap of undervaluation of privatized fixed assets;
7. Resource-institutional trap;
8. The trap of degradation of public administration institutions;
9. The trap of conservative forms of regulation of social and labor relations;
10. Post-privatization trap;
11. The trap of the social contact model when organizing the production of educational services;
12. Barter;
13. Non-payments;
14. Tax evasion;
15. Interest rate trap;
16. Currency trap;
17. Low pay trap;
18. Inflationary spiral of an unproductive economy;
19. Low savings rate trap;
20. Stagnation trap;
21. The shadow wage trap;
22. The trap of inefficient growth of the banking sector.
Thus, the above institutional traps are essentially transaction costs in a transition economy.
Let us assess the value of total transaction costs for large state-owned industrial enterprises in the process of institutional transformation of the Russian economy, that is, taking into account the corresponding institutional traps (see Table 1). Let’s take the “technologically necessary” cost as a starting point. Let us take into account the increase in transaction costs due to corruption, barter, and administrative barriers.
Table 1. Estimation of additional transaction costs of institutional transformation in Russia in the mid-90s, %
Let us separately note the specifics of the Russian transition period: the state paid large enterprises largely through cash offsets, the discount on which was about 30%.
If we take into account the additional costs associated with harsh natural and climatic conditions and the vast territory of the country, we can conclude that during the process of institutional transformation, many Russian enterprises worked in the mode of “eating” previously accumulated assets. In such a situation, ensuring the competitiveness of the domestic economy is the main task, and estimates of transaction costs must be taken into account to develop an adequate industrial policy.
Chapter 3. Transaction costs and their impact on market functioning
3.1. Transaction costs as a barrier to entry into the small business market
The development of market relations has sharply updated the topic of barriers to entry into the market for small businesses. But what does it mean to enter the market? Is it enough to go through the formal registration procedure? If not, what are the additional conditions for overcoming barriers to entry? These and similar questions are of a practical nature, since the height and configuration of the entry barrier are limiting factors in the development of small businesses, which in turn affects the competitiveness of the market environment, the quality of goods and their affordability for consumers.
Let us consider ten years of experience of Russian entrepreneurship through the prism of the dynamics of transaction costs, which determine the height of barriers to entry into the market.
Entering the market is a procedure for establishing and maintaining contractual relations with the main counterparties of market interaction. With this understanding, the process of overcoming entry barriers is not so much a set of standard organizational actions as a figurative name for a strategy for expanding and modifying the horizons of entrepreneurial activity. Accordingly, the problem of entry barriers is relevant both for those who are taking their first steps in business and for experienced entrepreneurs. To denote the costs associated with servicing contractual relations, as well as the transfer, specification and protection of property rights, the term transaction costs is used.
Overcoming barriers to entry into the market means the resource ability of an economic entity, in addition to the costs directly for the production of goods or services, to bear the costs associated with the establishment and functioning of contractual relations with all counterparties in the external and internal environment of the business organization.
Counterparties in the external environment of a business organization are state and local authorities, partner and competitive enterprises, market infrastructure objects, the media, consumers, etc. The subjects of contractual relations in the internal environment of a business organization are employees and business units. Establishing mutually acceptable conditions for interaction with all groups of subjects - representatives of interests in the external and internal environment of a business organization - is a resource-intensive procedure. Its price is transaction costs.
The fact of contractuality in the external and internal environment of the enterprise indicates the presence of transaction costs. However, their form, size and structure are determined by the spectrum of economic, political and social characteristics of market interaction.
Industry segments of market entry: dynamics of priorities. Obviously, transaction costs are determined by the industry of the enterprise. Inter-industry differentiation of their size is not limited to differences in licensing fees, but represents payment for a wide range of intra-industry practices (legal and illegal), outside of which the business is doomed to failure. Thus, the organization of a casino “prescribes” special solvent attention to security agencies, the opening of a cafe - to sanitary and epidemiological stations, trade in non-ferrous metals - to licensed structures, and export-import operations - to customs services. It is logical to assume that in those industries where transaction costs were temporarily relatively low, there was an increase in entrepreneurial “debuts”. Thus, shifts in the industry preferences of debutant entrepreneurs serve as an indirect indicator of the dynamics of transaction costs of entering the market depending on the industry segment of entry.
Indeed, the industry preferences of aspiring entrepreneurs vary greatly. Against the backdrop of a consistently high commitment to trade, the degree of “trade concentration” of debutants varies significantly. “Entrepreneurs, whose initiative dates back to the late 80s, have entered a wide range of industries with a high degree of intensity. The exceptions were industries of clearly defined “market origin”: finance, credit, insurance, general commercial activities to ensure the functioning of the market. Until the mid-90s, industry priorities for entering the market were eroding. This did not affect only wholesale trade, the growing attention to which from private business dates back to a later period (the second half of the 90s), which can be explained by the inertia of legislation in this area.
But since 1996 the situation has changed dramatically. Retail trade, catering and consumer services are becoming the main industry segment for entering the market. Moreover, the possibility of further repurposing also tends to decrease. Channels of vertical mobility and “inter-sectoral drift” are increasingly narrowing.
Figuratively speaking, entrepreneurs whose start of activity dates back to 1996-1997, unlike the “pioneers” (late 80s - early 90s), concentrated their efforts primarily on a narrow area of the industry segment of market entry - small retail trade , household services and catering. Establishing contractual relations in other industries is becoming an increasingly resource-intensive process due to increased requirements for the amount of start-up capital (financial, intellectual, social connections, etc.) and the volume of transaction costs associated with the functioning.”
An important role was played by the differences in transaction costs not only in size, but also in the degree of legality. In conditions of widespread shadow economic relations between market agents, the ability of an economic entity to bear the burden of transaction costs is determined not by the absolute indicator of its solvency, but by the structure of income according to the degree of their legality. Meanwhile, the proportions of shadow and legal business activities are largely determined by the industry affiliation of the company. The potential for illegal behavior is nothing more than an organizational resource for adaptation to an unfavorable economic environment. The inability to function effectively in a legal regime has led to the priority development of those industries whose shadow activities have an ingrained tradition.
Manufacturing, unlike commerce, is characterized by a significantly lower potential for illegal activity. There are many objective reasons for this, for example, the inability of production structures to close and open with a certain regularity under a new name, which reduces their maneuverability in dialogue with the tax department. Accordingly, the subjective assessment of the risk of shadow activity increases, which acts as a factor limiting the spread of illegal practices. The predominantly shadow nature of transaction costs has a particularly difficult impact on industries whose potential for illegal activity is relatively low. This explains the unattractiveness of such industries as industry, construction, transport and communications, which is another value-cultural criterion for the suitability of the social quality of starting entrepreneurs.
Problems of organization and functioning of enterprises depending on the time of their creation. It seems reasonable to hypothesize that the degree of severity of entrepreneurship problems and their hierarchy are determined by the time of start of entrepreneurial activity. At the same time, of particular interest is not the nominal list of problems of entrepreneurship, and not even its transformation over time, but the structure of transaction costs that “extend” this or that problem situation.
The data indicate a change in the composition of problems in the initial phase of the enterprise life cycle (Table 1).
Table 1. Problems of the initial period and 1997 Depending on the time of establishment of the enterprise, %
| Problems | Until 1988 | 1989-1991 | 1992-1995 | 1996-1997 |
| Initial period | ||||
| Finance | 66 | 73 | 69 | 82 |
| Material and technical base | 37 | 35 | 33 | 22 |
| Registration, licensing | 22 | 18 | 19 | 48 |
| Power pressure (racket) | 20 | 23 | 13 | 11 |
| Information | 10 | 23 | 18 | 4 |
| Local authority | 15 | 9 | 15 | 15 |
| Personnel, knowledge, population | 16 | 41 | 41 | 36 |
| There were no problems | 27 | 18 | 11 | 7 |
| 1997 | ||||
| Business partners | 27 | 21 | 28 | 7 |
| Consumers | 30 | 25 | 21 | 28 |
| Collective, "team" | 8 | 18 | 12 | 10 |
| Local authority | 30 | 50 | 30 | 40 |
| There were no problems | 29 | 29 | 37 | 38 |
In dynamics, the difficulties of the initial period, despite government programs to support entrepreneurship, the growing loyalty of the population to innovative behavior, the creation of market infrastructure and other indicators of favorable treatment, are intensifying. In general, the share of entrepreneurs who have not experienced problems in the initial period is approximately proportional to their entrepreneurial experience: those who created an entrepreneurial structure earlier experienced fewer difficulties at the initial stage of its development.
The presence of a problem requires the diversion of resources to solve it. “Coping with a problem” means being able to bear the resource costs (financial, material, intellectual) associated with its solution. These costs, as a rule, are in the nature of transaction costs, since they are designed to establish a system of compromise agreement between the participants in the problem situation.
The largest factor load falls on problems of interaction with external agents (criminal structures and government agencies), and the smallest on problems of the professional viability of the entrepreneur and the attitude of the population. The material conditions of business activity (finance, material and technical base, access to premises) occupy an intermediate position.
These problem fields generate transaction costs aimed at coordinating the interests of agents involved in a particular problem. For example, the problem of access to premises gives rise to transaction costs in the form of payment for the services of the “managers” of the premises of municipal authorities, as well as consultants and lawyers brought in for assistance. And establishing contractual relations with the criminal world means expenses for paying for security services, resolving conflict situations, insuring partnership non-compliance, etc.
It should be especially noted that the problems of interaction with authorities and the criminal world are one factor. This indicates a high probability of coincidence in the circle of enterprises that have problems with both the authorities and criminal structures, in other words, the authorities are just as selectively partial to entrepreneurs as the criminal world. Particular attention from both sides is given to enterprises whose industry affiliation and scale of activity suggest the presence of excess profits. Its division is the essence of the problems that accompany the dialogue of entrepreneurs both with the authorities and with security groups.
Problems of increasing relevance include problems of access to finance and obtaining licenses (Table 1). But if the lack of financial resources is a constant leader on the list of problems, then the sharp complication of licensing practices is a new and alarming phenomenon. In 1996-1997 Licensing problems took second place after the financial deficit, pushing aside logistical problems. This means that in the structure of transaction costs the share of those who “serve” the dialogue with financial structures and government bodies has increased. Such costs can appear both in illegal form (bribes, equity participation in non-performing loans, etc.) and in legal form (for example, payment for consultations on licensing terms).
Problems of logistics, access to premises, and racketeering are characterized by decreasing relevance (Table 1). The problem of finding information about business partners has virtually disappeared. This inevitably affects the structure of transaction costs, which increasingly have as their “addressees” subjects of the real estate market and material and technical means, as well as representatives of the power services market.
The problems identified as “pressure from local authorities” are surprisingly resilient. Without claiming to be particularly acute, they consistently complicated the lives of 9-15% of entrepreneurs during their formation in this capacity (Table 1). The most common way to “solve” problems with the authorities is a banal bribe. The stability of the problem generates the stability of the cost item in the secret budget of transaction costs of entrepreneurs.
As a result, two facts can be stated. Firstly, the share of entrepreneurs who have not experienced problems practically does not depend on the length of business activity and is approximately one third (29-38%). Secondly, managers are much more likely to encounter serious problems when organizing enterprises than during their ongoing operation. Moreover, the later the start of entrepreneurial activity is dated, the more noticeable this discrepancy is (Table 1).
So, the difficulties of “entering” the market increase over time. This means that transaction costs that serve the process of overcoming barriers to entry into the market tend to increase species diversity and increase financial impressiveness. But those who have overcome the barrier to entry into the market experience approximately the same burden of problems. At the same time, problems associated with the organization of the enterprise are more common than with its functioning.
Negative practices (racketeering, bribes, non-obligatory partners) and experience as an entrepreneur. Relations with authorities, law enforcement agencies and partners are the most essential components of entrepreneurial success. This is a worldwide practice. In this case, Russia only confirms it, which, however, does not prevent it from demonstrating its specificity - the predominantly shadow nature of the emerging relations. It is fundamentally important that the establishment of contractual relations with these subjects of market interaction inevitably condemns the entrepreneur to transaction costs. It is the ability of an economic entity to bear the burden of transaction costs that is one of the most important guarantees for successfully overcoming “barriers to entry” into the market space. But if there is no alternative to the presence of transaction costs serving relations with these most influential interest groups in the external environment of a business organization (authority, partners, the criminal world), then their form and size allow for variations. This could be, for example, legal payments for services, or it could be illegal financing of a corrupt government apparatus.
“The presence of bribery, threats of force and violation of obligations in Russian entrepreneurship is confirmed by the absolute majority of respondents. Thus, only 14% of entrepreneurs deny the existence of bureaucratic extortion, 22% deny racketeering, and 9% deny the non-compliance of partners.”
But the days of “bribes in envelopes” are gone. Currently, they come in a wide variety of forms. In essence, we are talking about different material and organizational forms of transaction costs that entrepreneurs pay for the right to establish mutually acceptable rules for interaction with government agencies. These include tourist routes for a symbolic price, individual work at mass production prices, provision of a share in one’s own enterprise, etc.
Functionally, bribes are divided into those that speed up the resolution of some issue and those that are the only, non-alternative way to solve the problem. The fact of uncontested bribery is extremely important, since a bribe, being an indicator of the financial ability of an entrepreneur to concentrate large sums, provokes interest in him from criminal structures. In addition, a bribe also indicates the undesirability of a meeting between an entrepreneur and law enforcement agencies. It is precisely such entrepreneurs who become, first and foremost, financial donors to the criminal world. Thus, a bribe solves some problems and creates others, adding links to a complex chain of transaction costs.
“The mechanism of bribes is used most intensively when solving problems related to various types of permits for economic activities (46%); with access to premises (35%), to loans (24%), and the least - with ensuring business security (14%).”
The criminal world is increasingly limiting the list of applicants for “business games”, but is building its relationships with those who have established themselves as “players” all the more harshly. In this sense, the role of criminal structures in creating “barriers to entry” has weakened compared to the situation two or three years ago. This means a reduction in the share of costs servicing dialogue with law enforcement agencies in the total volume of transaction costs to overcome barriers to entry into the market. However, those who overcome these barriers find themselves in the space of already established canons of interaction with crime. However, these canons are becoming more and more multivariate.
Accordingly, the differentiation of transaction costs associated with the need to have a power partner depends more and more on the industry of the enterprise and is less and less determined by the dexterity or individual luck of the entrepreneur. The costs of contractual relationships with the security forces, characteristic of a particular industry, are becoming more and more unified in size and diversified in form. You can enter into relationships with the FSB, you can with private security agencies, you can with criminal structures. You can pay into the thieves' common fund, or you can become a sponsor of a police department - the differences in the amount of spending will be insignificant.
Thus, the dynamics of transaction costs is a unique reflection of the changing conditions for the development of Russian entrepreneurship during the market reform. In general, the conditions for entry into most industry markets have become seriously more complicated, and compared to the situation five years ago, the barrier to entry has increased significantly.
To summarize, two conclusions can be drawn. Firstly, the category of transaction costs, which has significant research traditions in Western science, becomes a methodological key to the study of Russian reality, in particular, the height and configuration of barriers to entry into the market for new business entities. And we are not talking about blindly borrowing Western models, but about using an apparatus that is adequate to the market nature of the dialogue between all participants in the business environment. The methodological potential of this approach is higher, the more noticeable in the expenses of economic entities is the share of costs not directly related to the production of goods and services. And for modern Russia this is most typical with its vast formalized labyrinths of legal business and informal practices for overcoming them.
Secondly, transaction costs of overcoming barriers to entry into the market for new business entities have certainly increased compared to the situation five to seven years ago. However, it would be a clear simplification to consider this process uniform across industries, regions, organizational and legal forms, etc. With a general tendency towards their growth, the configuration of entry barriers was quite dynamic, and individual components of the barrier situation (educational and gender preferences) became even less tough. In general, it should be noted that there is a clear dominance of informal practices in overcoming barriers to entry, which is a certain social filter that limits the attitudes of start-up entrepreneurs towards legal behavior.
3.2. Transaction costs of overcoming administrative barriers are economic losses to society
One of the pressing problems of the Russian economy is the high level of administrative barriers when carrying out economic activities. Administrative barriers in the economy are rules established by decisions of government bodies, compliance with which is a mandatory condition for conducting activities in the market, incoming payments for going through bureaucratic procedures that usually do not go to the budget.
Administrative barriers arise in the following situations:
When gaining access to resources and ownership rights to them (registration of an enterprise, registration of changes in the status of an enterprise, its statutory documents, obtaining the right to rent premises, access to loans, etc.);
Upon receipt of the right to carry out economic activity (its licensing, registration of goods, certification of goods and services, etc.);
In the current implementation of economic activities (sanctions for violations of established rules, coordination of decisions made with regulatory organizations, receipt of various benefits).
This “barrier” nature of regulation has a number of significant negative consequences. Firstly, it leads to serious economic losses for society, both direct, expressed in rising prices, and indirect, due to underproduction of GDP due to inefficient use of resources. Secondly, it does not solve the problems for which barriers are actually created, while making it difficult to use other, more effective methods of government regulation. Thirdly, the “barrier” nature of the economy provides fertile ground for the rent-seeking behavior of government officials and associated commercial structures involved in the “barrier” business.
Economic losses to society from the establishment of administrative barriers to business activities consist of two components:
Transaction costs (payments for the right to use resources) caused by the need to overcome barriers, a significant part of which is transformed into population losses due to rising retail prices - direct losses;
A drop in the efficiency of using available resources and underproduction of value (the presence of administrative barriers significantly complicates entry into the market, primarily for small and medium-sized businesses, which leads to a decrease in the level of competition according to the overall efficiency of the economy) - indirect losses.
Quantifying the direct losses to society from the presence of administrative barriers is quite a complex matter, like any quantitative analysis of transaction costs. Let us consider estimates of the cost of individual administrative barriers, as well as some estimates of overall direct losses from the presence of such barriers in the Russian economy.
Registration of legal entities, according to entrepreneurs themselves, does not act as an insurmountable barrier to entry into the market. However, already at this stage we can talk about unproductive losses of entrepreneurs, amounting to a significant amount nationwide. There are two possible ways to register an enterprise: independently and using an intermediary company. It can be assumed that the market value of intermediary services is approximately equal to the costs of entrepreneurs for self-registration of enterprises (additional costs of time and resources), since the market for intermediary services is competitive.
The cost of registering a “turnkey” standard enterprise in Moscow is about 12,000 rubles, in the regions it ranges from 2,000 to 10,000 rubles. The price of registration varies depending on the nature of the enterprise and the region. In addition, the cost of intermediary services for registration may include the provision of a legal address. The average cost of registration in the country is, according to various estimates, from 4,600 rubles. (registration costs are equal to the average cost of intermediary services) up to 10,000 rubles. (other costs of entrepreneurs that occur even when using the services of intermediaries are added to the cost of intermediary services). In 2000, about 30,000 enterprises were registered in Russia every month. Thus, the total costs of registering enterprises in 2000 ranged from 138 million to 300 million rubles. monthly, and on an annual basis - from 60 million to 130 million dollars. At the same time, the official registration fee rate varied by region - from 0.5 to 10 minimum wages. If we take 5 minimum wages as the average value, then official payments for registration were approximately 12 million rubles monthly. Thus, registration fees themselves accounted for less than 10% of the total costs associated with registration.
In Kuzbass they tried to solve the registration problem by transferring the right to register enterprises and firms from the territorial registration chambers to the tax inspectorates. Tax officials claim that this will simplify the registration procedure and remove unnecessary administrative barriers that have hindered entrepreneurs. Entrepreneurs, in turn, expect leapfrogs with constituent documents, and law firms see new opportunities for their business in the new registration procedure. According to the developers of the law, its strength is registration based on the “one-window” principle and the procedure by which shell companies are destroyed. Within 5 days the enterprise will be registered, and after another 5 days it will be entered into the Unified State Register of Taxpayers. In this case, the exact coincidence of the actual and legal addresses of the organization is important. The most important thing is that all procedures are truly simplified and quite large savings are created on a national scale.
Mandatory certification of goods and services, which covers about 80% of the product range, is another administrative barrier. According to minimum estimates, calculated according to the recommendations of the State Standard of the Russian Federation, amounts equivalent to 120-150 million dollars are “pumped” from industry and trade in the form of certification fees. in year.
Licensing of certain types of activities also serves as a very noticeable administrative barrier. In 2000 In Russia, more than 500 types of activities were subject to licensing, of which about 250 were based on the federal law “On Licensing of Certain Types of Activities”, the rest were subject to licensing on the basis of other laws and by-laws of constituent entities of the Russian Federation. Moreover, since the adoption of the law “On licensing of certain types of activities” in 1995. There is a tendency towards a constant expansion of the list of activities subject to licensing, including through their unjustified fragmentation.
Despite the fact that the law clearly defines that licensing includes state bodies and local government bodies, in practice departmental and regional licensing, expert and other centers are being created en masse, contacting which to obtain a pre-licensing expert opinion is mandatory. Decisions on the creation of such centers are made, as a rule, by departmental regulations and decisions of regional or local administrations. There are also exceptions in the form of direct entries in government regulations.
An example is the licensing practice in St. Petersburg. Licensing of all types of activities is carried out with the obligatory pre-licensing inspection (examination) of the applicant to determine its compliance with licensing requirements and conditions. Pre-licensing examination is carried out both by specialists of the Licensing Chamber and by expert centers accredited by it. An audit of the territorial administration of the MAP of Russia showed that in the period from July 1 to November 19, 1999, expert centers performed 1,424 examinations, while specialists from the Licensing Chamber performed 586. According to the results of the analysis of assignments to expert centers, which are issued by the Licensing Chamber for pre-licensing examination, The range of issues that are the subject of the examination includes exclusively checking the accuracy of the license, information and documents submitted by the applicant. At the same time, commercial organizations, including direct competitors of license applicants and licensees, were accredited by the Licensing Chamber as independent expert organizations. As a result of the spread of this practice, business entities, in addition to the license fee itself, are forced to pay for imposed services for pre-licensing examination of documentation, and the content of such examinations actually duplicates the functions of licensing authorities, which are obliged to verify the accuracy of the documentation submitted to obtain a license.
Unfortunately, in Russia there have been no studies analyzing the total costs of entrepreneurs associated with obtaining licenses, so it is difficult to talk about specific figures for the economic losses of society from the presence of this administrative barrier. However, we can cite a calculation made by specialists from the Ministry of Economic Development and Trade of the Russian Federation for one type of license. Thus, the procedure for obtaining a license for bread production includes visiting up to 8 authorities, completing more than 20 documents, and costs up to 15 thousand rubles. and about 270 hours of time. The cost per unit of production increases by 3%. On an annual basis, this means more than $100 million in additional costs for the population. However, the presence of a license does not guarantee the quality of the product.
Another administrative barrier for which quantitative estimates of transaction costs were carried out is the marking of products with marks of conformity protected from counterfeiting, introduced on the basis of Decree of the Government of the Russian Federation of May 17, 1997 No. 601. Calculations made by specialists of the International Confederation of Consumer Societies (ConfOP) on order of INP "Social Contract", showed that the approximate volume of the market for marks of conformity and registration marks amounted to 150-200 million dollars in 2000. Moreover, the costs of trade organizations for applying the mark were equal to 50-70 million dollars. That is the total costs of overcoming this administrative barrier were equal to 200-270 million dollars [Auzan A., Kryuchkova P. Administrative barriers in the economy: tasks of unblocking // Questions of Economics. – 2001. - No. 5].
If we talk about economic losses as a result of ongoing control over the activities of business entities by various regulatory agencies, they consist of two parts: direct costs of paying fines and “compensation” and unproductive time. Data from a survey of small businesses conducted by the Russian Independent Institute of Social and National Problems in 1999 show that the costs associated with “shadow” payments to regulatory authorities and unproductive time spent are comparable to payments to racketeers.
According to data obtained during in-depth interviews with business managers in Moscow, total payments (including fines imposed) in the organized retail trade sector amount to about 1 thousand rubles. per month per workplace. At the same time, the ratio of costs associated with unproductive use of working time and penalties (official and unofficial) is on average 3 to 2.
In the field of investment activity, a significant obstacle to its implementation is the numerous approvals with executive authorities at the regional and local levels, as well as with the rules governing the activities of designers. It should be borne in mind that many requirements for investment projects are not codified, so it is not possible to take them into account at the project development stage. The cost of approving design documentation is about 10-15% of the cost of the project delivered to the customer on a turnkey basis.
In the Kemerovo region, an expert advisory council on investment activities has been created under the governor. The council will deal with issues of development and government support for investment activities in Kuzbass. It included representatives of the regional Council of People's Deputies, heads of industrial enterprises, representatives of science and business. This advisory body is vested with broad powers and will make decisions, including on supporting investment projects and providing state support for their implementation, up to the preparation of bills for maximum support for the implementation of a specific project. This measure, taken by the administration of the Kemerovo region, can significantly reduce transaction costs in the investment activities of Kuzbass.
Similar costs arise when obtaining public procurement contracts, subsidies or loans through government business support mechanisms. As V. Radaev noted: “In general, the amount of transaction costs associated with paying for the services of government officials varies from “modest” gifts (the cost of which can now be measured in one or several hundred dollars) to 10% of the amount of the allocated subsidy or the value of the secured contract .
An assessment of the total direct losses of the Russian economy from the presence of administrative barriers is given in a study conducted by a group of specialists from the Faculty of Economics of Moscow State University named after M.V. Lomonosov, under the leadership of V. Tambovtsev. According to his data, the monthly additional costs of overcoming administrative barriers in the sphere of trade and production amounted to 18-19 billion rubles. The monthly retail trade turnover in 2000 was approximately 188 billion rubles. Thus, the share of extortions in trade turnover was about 10%. Costs to consumers from the presence of administrative barriers and transaction costs of overcoming them ranged from 500 to 550 rubles. per month per family.
Thus, specific examples of administrative barriers in the Russian economy once again confirmed the presence of high transaction costs in it, which are transformed into significant direct economic losses to society.
3.3. Transaction costs at the micro level – low rates of individual savings
Today, many experts admit that the sluggish growth of the Russian economy is largely due to high transaction costs. If we project the now classic studies of transaction costs onto Russian reality, we can confidently say that high transaction costs are an integral feature of developing markets. Moreover, the influence of transaction costs on economic growth is not limited to the problems of specification of property rights and depersonalization of exchange. By influencing the length of working hours of individuals and the supply of labor, transaction costs create a “vicious circle” of low rates of accumulation, the exit from which is quite difficult.
One of the most obvious manifestations of market imperfections is significant differences in prices for the same product. In such conditions, the traditional dilemma of “buy or produce” for an economy of high transaction costs becomes secondary to the alternative “buy or look for a better price.” The spread of prices in today's markets cannot but increase the uncertainty of future markets. In conditions of imperfection of present and uncertainty of future markets, the most reliable economic parameters of consumer behavior are the wage rate and the level of current consumption, which determine the distribution of income between consumption and savings.
An individual spends part of his time searching for the best price for purchasing the consumer goods he needs. The lack of reliable information about current prices and the uncertainty of the prices of future transactions do not allow him to carry out the classical redistribution of income between consumption and accumulation, taking into account the interest rate. Therefore, in the process of searching for the best price, he seeks to create a reserve intended for future consumption, naturally wanting to reserve the maximum possible amount.
In an imperfect market, an individual has the opportunity to maximize the absolute value of the reserve by searching for a favorable price for goods that constitute his chosen level of current consumption. Search time reduces operating time. Accordingly, at a given wage rate, an individual’s income decreases. But the search also brings positive results. Thanks to search, costs are also reduced, since at a given level of consumption the transaction price decreases as the search time increases.
Searching for a better price refers to any pastime that is an alternative to working for hire and creates income by saving on price. It also includes the purchase of semi-finished products in order to bring them to the level of consumption, when the alternative “buy or search” is transformed into the “buy or produce” paradigm, classic for the theory of transaction costs.
Having determined the desired level of consumption, the individual begins to replace working time with time for searching for a low price. Naturally, the individual will search until the gain from the price difference is greater than the lost wages. Accordingly, at the stage of searching for a low price, the rate of decrease in expenses will be higher than the rate of decrease in income. But if an individual already knows where to find the most attractive prices, then he will not waste time searching. In this case, income will decrease faster than expenses at the very beginning of the search.
By analyzing certain combinations of individual and market parameters, differences between developed and developing markets can be identified. If we accept as a hypothesis that in a model of behavior in an underdeveloped market economy the wage rate is low and the price dispersion is high, then in order to achieve the optimal ratio of expenses and income it is necessary that consumption be low and the tendency to replace working time with search time - high. The model of behavior in a developed market economy will be different. A high wage rate and a slight dispersion of prices determine a high level of consumption and a low propensity to replace working time with search time. In developed markets, an increase in search time is accompanied by a decrease in both work time and “pure leisure” time. In imperfect markets, the situation may be completely different. An increase in search time leads to a decrease in work time and to an increase, rather than a decrease, in “pure leisure” time. Therefore, other things being equal, the search for cheap goods in imperfect markets has the very beneficial side effect of increasing the amount of “pure leisure” time.
As a result, it is possible to establish an interdependence between the degree of market imperfection, the possibility of replacing working time with search, and the propensities to consume and accumulate: given the wage rate and the degree of market imperfection, the lower the level of aspirations, the lower the willingness to replace working time with searching for cheap goods.
If we return to the analysis of an individual’s behavior model at the micro level, then one of the most interesting ways of its development is the study of the possibility of economies of scale in search. This phenomenon is well known and has various explanations. For example, search economies of scale can be conceptualized as a reduction in the unit fixed search costs associated with a trip to a store.
Let's consider the individual's ability to increase current consumption by redistributing time. Suppose an individual decides to increase current consumption by increasing working time. In this case, he is forced to reduce the search time. But reducing search time automatically increases the price of purchased goods. This means that an attempt to increase consumption by increasing working hours will be unsuccessful. Reducing search time will raise prices in such a way that the income increased due to increased working time will be spent on fewer, rather than more, goods. And in order to optimize the ratio of income and expenses with increasing working hours, it is necessary to reduce consumption.
But a completely different situation develops if an individual decides to increase consumption not by reducing search time, but by increasing it relative to the optimal one. There will be economies of search scale.
Saving on the difference in price, which, with a smaller quantity of purchased goods, was irrational, since it did not cover the loss of working time, will become effective if the volume of consumption is increased relative to the search time. We would get the same result if we treated the trip to the store as a fixed cost of searching for products. Let's say, a trip to a hypermarket for one or two goods is irrational. But it immediately becomes justified if a small difference in price is multiplied by a large number of goods. But the presented model somewhat changes the understanding of such economies of scale. She draws our attention to the possibility of increasing consumption during the search itself, by increasing its time. The model reflects a situation where we spend more time in hypermarkets than planned. Having arrived there, we try to make the most of the trip, that is, to reduce its unit costs, but at the same time we buy more goods, spending more time. Thus, at a given wage rate, the volume of consumption can indeed be increased, but not by increasing working hours, but only by increasing the search for cheaper goods.
Now let's see how an increase in wage rate affects an individual's behavior model. At a constant wage rate, an attempt to increase work time results in a reduction in consumption due to an increase in the prices of purchased goods caused by a reduction in search time. This situation can easily be projected onto the growth of wage rates. A slight increase in the wage rate can simply be “eaten up” by higher prices if we reduce the search time for a job. In the presented model, the classical substitution effect has a very serious “enemy” in the form of prices in imperfect markets that depend on the search time. But this does not mean that this effect is impossible to manifest.
Firstly, with a significant increase in the wage rate, it will cover the increase in consumption and compensate for increased prices. Secondly, even with a not very significant increase in the wage rate, an individual can increase his working time. Moreover, he can even go to reduce consumption. It is in this light that the positive response to high overtime rates should be viewed. Consumption in such cases may actually be reduced. Such a “sacrifice” may be due to the motive of increasing work time in order to increase the accumulation rate. And in order to increase the rate of accumulation, an individual can reduce current consumption.
Of course, it is easier for an individual to increase not savings, but current consumption, using economies of scale in search and an increased wage rate. However, in this situation other restrictions begin to apply. When purchasing durable goods, the savings rate may still decrease. The increase in wage rates may not be enough to compensate for the reduction in working hours. If an individual tries to simultaneously keep the level of savings constant and save on the scale of search, then he will have to be content with saving on the scale of search for low-value goods. The latter is difficult to reconcile with the model of behavior when wages increase, which may imply an increase in the quality of consumption.
The higher the real wage, the less valuable goods are acquired due to economies of scale, provided that we strive to at least not reduce the amount of savings. A logical limitation on continuing the search is the quality of current consumption. But this limitation is weakened to a large extent if we, firstly, make the object of analysis food products, the demand for which has a very low elasticity, and, secondly, we consider the underconsumption of food products as the initial situation, when the desired level of consumption is initially unattainable due to the low wage rate, which implies a very low initial rate of accumulation. In this situation, an increase in real wages can increase both savings and current consumption of food products, but under one condition - the individual will easily sacrifice working time.
We must not forget that the degree of market imperfection also affects the dynamics of “pure leisure” time. In imperfect markets, an increase in search time is accompanied not by a reduction, but by an increase in “pure leisure” time. This factor can also influence decision making. In other words, in conditions of underdeveloped markets, underconsumption of food products and a low rate of accumulation, an increase in the wage rate is more likely to cause a reduction in working time than an increase in it.
In developed countries, the problem of underconsumption does not exist. However, it cannot be said about the markets of developed countries that they are perfect, at least in terms of price dispersion. And the imperfection of markets, or rather the dispersion of prices, greatly complicates the choice when increasing the wage rate. In such markets, not only the substitution effect, but also the income effect has a powerful counteraction. Redistribution of time can change either the rate of accumulation or the structure, or more precisely, the quality of consumption. Therefore, paradoxically, it is much easier for an individual not to redistribute time either in favor of work or in favor of searching. The rate of accumulation will remain unchanged, and the growth of consumption will correspond to the increase in the wage rate. This assumption coincides with the hypothesis of R. Ehrenberg and R. Smith. In their opinion, "a moment-by-moment analysis of men's work behavior as a whole leads to the conclusion that both the income effect and the substitution effect are small and perhaps even zero."
The answer to the question of why substitution and income effects may tend to zero for men can be found by examining the increase in the wage rate on the value of the reserve and the savings rate.
Keeping working time unchanged while wages increase leaves the rate of accumulation constant, but only if this rate of accumulation suits the individual. The situation when an individual spends previously accumulated funds or uses a consumer loan can only persist in the short term. Of course, the individual will strive to ensure that income exceeds expenses.
Now let's interpret the original model differently. Let the family's income be equal to its expenses, while the husband creates a reserve to support his wife. There is nothing unnatural in the assumption that the husband earns more, while the wife does most of the shopping. But the relative dynamics of working time for women’s search time is higher than the relative dynamics of purchase prices for the same search time. Since men and women in the family face markets with equal degrees of imperfection, with a higher level of consumption (purchases or bringing semi-finished products to the level of consumption, when, as is customary in many Eastern cultures, husbands do the shopping) and a lower wage rate, women's working hours will be more sensitive to changes in search time than in men. It is therefore not surprising that “research also finds, in general, that for women the substitution effect dominates the income effect.” Further development of the model may lead to the conclusion: an increase in the number of children can force men to save on their consumption and work more at a given wage rate, but an increase in the wage rate will force the father with many children to reduce his working hours.
Thus, since market perfection cannot be achieved overnight, and narrowing the price range of commodity markets takes some time, the problem of increasing the rate of accumulation is concentrated in the area of employment and consumption. Therefore, it is obvious that in Russian conditions, massive imports of consumer goods, promoting conspicuous consumption, have a negative side effect. Moreover, the higher the share of durable goods in current consumption, the lower the accumulation rate.
In the context of the model provided, it is clear that in conditions of imperfect markets, the purchase of durable goods does not simply increase costs and “eat up” savings. Born in conditions of scattered prices, conspicuous consumption is accompanied by a reduction in working time in favor of searching for favorable prices or in favor of other sources of income. A kind of “vicious circle” arises. Historically low levels of consumption and low incomes should at first glance strengthen the substitution effect and stimulate labor supply. But in conditions of imperfect markets and large differences in prices for consumer goods, increasing wages stimulates the income effect. This effect is enhanced by the imperfection of the labor market itself, which makes it possible to increase not only search, but also “pure leisure” at the expense of working time. And conspicuous consumption only reinforces this trend.
Conclusion
Modern market relations are inextricably linked with the concept of transaction costs. They include costs associated with searching for information, costs of negotiations, work on measuring the properties of a product (service), costs of specification and protection of property rights, as well as costs associated with overcoming the opportunistic behavior of counterparties.
Political economy of the 19th century. actually abstracted from transaction costs. However, in the twentieth century. It became simply impossible not to notice them. In a market economy, where subjects are isolated from each other, a prerequisite for exchange is the ownership of goods by agents of economic relations. It is the owner, entering into market relations, who determines how and under what conditions the economic benefit will be transferred to another person, that is, what is the object of transfer: rights of use, possession, disposal, management, etc. Collection of the necessary data on the powers of the seller includes in the costs of searching for information and negotiating. Full ownership usually includes a whole set of rights: possession, use, disposal, management, the right to income, to the capital value of the good, to security, to transfer the good by inheritance or will, as well as perpetuity, prohibition of harmful use, liability in the form of collection and residual character.
The share of transaction costs is especially high in a society where property rights are poorly defined (specified), and the mechanism of interaction between government agencies and business entities has not been worked out. Such conditions are typical for countries transitioning to a market economy. Moreover, a significant component of transaction costs in a transition economy are the costs of institutional transformation (institutional traps). Many features of the transition period in Russia are largely explained by these costs. The insufficiently developed legal side of market relations creates favorable conditions for fraud, deception, and distortion of information about the consumer properties of goods and their real value.
Having examined the main manifestations of transaction costs in the modern Russian economy, the following fundamental conclusions can be drawn:
1. The Russian economy has already reached a level where “deal servicing” absorbs huge resources, but the productivity of a successful transaction continues to remain at a lower level compared to costs;
2. at the macro level, transaction costs manifest themselves, first of all, in the need to overcome administrative barriers when carrying out economic activities, which as a result leads to significant direct economic losses to society in the form of rising retail prices and underproduction of GDP due to inefficient use of resources;
3. transaction costs themselves are a significant barrier to entry into the market for small businesses, which in turn affects the competitiveness of the market environment, the quality of goods and their affordability for consumers;
4. at the micro level, transaction costs, affecting the length of working hours of individuals and the supply of labor, contribute to the creation of a low rate of accumulation.
Thus, transaction costs have a huge impact on the functioning of the market. Therefore, their accounting and minimization should represent the most important parameter of the economic activity of any company and the economy as a whole. Moreover, this is possible due to the improvement of legal norms, as well as strengthening the ethical foundation, honesty and responsibility, and the ideology of consensus in society. The latter direction can lead to the creation of soft market infrastructure and become the most effective and cost-effective way to protect the interests of everyone.
List of used literature:
1. Auzan A., Kryuchkova P. Administrative barriers in the economy: tasks of unblocking // Questions of Economics. – 2001. – No. 5.
2. Barsukova S. Yu. Transaction costs of entering the market of small businesses // Problems of forecasting. – 2000. – No. 1.
3. Gaidar E. Restorative growth and some features of the modern economic situation in Russia // Questions of Economics. – 2003. – No. 5.
4. Kirdina S. Institutional structure of modern Russia: evolutionary modernization // Questions of Economics. – 2004. – No. 10.
5. Kuzminov Ya. I. Course of institutional economics: institutions, networks, transaction costs, contracts. – M.: State University Higher School of Economics, 2006. – 442 p.
6. Lesnykh V., Popov E. Transaction costs in a transition economy // World Economy and International Relations. – 2006. – No. 3.
7. Lyasko A. Trust and transaction costs // Questions of Economics. – 2003. – No. 1.
8. Malakhov S. Transaction costs, economic growth and labor supply // Questions of Economics. – 2003. – No. 9.
9. Microeconomics: a practical approach: textbook / ed. Gryaznova A. G., Yudanova A. Yu. - M.: KNORUS, 2007. - 672 p.
10. Ovsienko Yu., Petrakov N. Russian transformation and its results // Questions of Economics. – 2004. – No. 5.
11. Chabanov V. E. Economy of the XXI century, or the third way of development. – S. – P., 2007. – 463 p.
12. Shamkhalov F.I. State and economy. Power and business. – M., 2005. – 358 p.
13. Shastitko A. E. External effects and transaction costs. – M., 1997. – 112 p.
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1. http://www.ako.ru/press
2. http:// www.ie.boom.ru
3. http://www.iet.ru
4. http://www.regnum.ru/news/economy
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The term “redistribution” denotes a type of economic relationship in which the movement of values and rights to use them is mediated by the center.
S. Kirdina “Institutional structure of modern Russia: evolutionary modernization” // Issues of Economics. – 2004. - No. 10. – P.96
S. Kirdina “Institutional structure of modern Russia: evolutionary modernization” // Issues of Economics. – 2004. - No. 10. – P.97.
North D.K. Institutions and economic growth: a historical introduction. – M., 1993. – P.71.
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Popov E., Lesnykh V. Transaction costs in a transition economy // World Economy and International Relations. – 2006. - No. 3. – P.76.
Barsukova S.Yu. Transaction costs of small business enterprises entering the market // Forecasting problems. – 2000. - No. 1. – P.110.
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Costs, expenses, cost are the most important economic categories. Their level largely determines the amount of profit and profitability of the enterprise, the efficiency of its economic activities. Reducing and optimizing costs are one of the main directions for improving the economic activity of each enterprise.
Until now, the majority of domestic and foreign business entities have considered two aggregated cost elements as management objects, which in their total determine the total costs of the enterprise. The first element is the costs associated with producing the product. This category includes direct material costs, direct labor costs, and manufacturing overhead costs. The second element, the costs of selling products, includes costs of transportation, packaging, advertising, sales promotion, etc.
However, recently, along with these most important elements that form the cost of production, enterprise transaction costs are increasingly becoming an object of study and cost management.
With a high degree of coherence among the various structures of a business system, transaction costs tend to a minimum; however, modern economic relations, on the contrary, are characterized by a high degree of specialization and localization of business connections; in this situation, the coherence of structures decreases and an increase in transaction costs is observed.
Under these conditions, there is a real need to study tools and mechanisms that would allow domestic business entities to minimize their transaction costs. In our opinion, the main directions of such research can be the following:
- 1. Determination of classification characteristics of transaction costs;
- 2. Determining the possibilities for quantifying such costs;
- 3. Identification of factors influencing the value of transaction costs.
As noted above, transaction costs reflect (measure) the degree of consistency of various organizational manifestations of the activities of economic entities. Therefore, it is very important to first divide them into types according to certain classification criteria for the purpose of subsequent analysis. In this sense, a simple determination of the types of transaction costs can play an even greater role for an economic entity than information about their absolute value.
This is explained by the fact that information about the types of transaction costs characteristic of a particular business entity can allow its management, with the help of competent policies, to free itself from some of them, while an attempt to measure the absolute value of transaction costs can lead to a number of problems, which will be said a little later.
And in the most general form, transaction costs can be classified into two groups: preliminary (ex ante) and final (ex post) costs. Upfront costs include:
- 1. Various types of costs for finding profitable business connections (partners, investors, clients).
- 2. Negotiation and contracting costs.
- 3. Costs of paying intermediaries.
- 4. Costs of providing guarantees for the transaction and others.
Final transaction costs include:
- 1. Adaptive costs for unexpected events.
- 2. Legal costs to eliminate contractual disagreements.
- 3. Costs of conflict resolution in non-judicial structures.
- 4. Costs of accurate fulfillment of contractual obligations.
I would like to note that quantitative assessment of the level of transaction costs is a very difficult task to solve. The fact is that it is almost impossible to obtain accurate quantitative estimates of the value of such costs, due to the action of several factors that distort the assessment:
- 1. The ambiguity of the problem lies in the fact that transaction costs themselves represent the sum of the costs of ensuring compliance with the terms of the transaction and the costs of evaluation. It follows from this that the management of an economic entity, at a subjective level, can approximately estimate the cost of a particular transaction. On the other hand, a more objective assessment will require certain costs for information about the properties of the transaction object, which will lead to an inevitable increase in transaction costs. And the more accurate assessment is required, the more these costs will increase.
- 2. There is a whole group of transaction costs that are difficult to quantify due to the significance of their magnitude and manifestation not only at the micro level, but also at the macro level. These may be costs caused by the forced nature of the relationships, or, conversely, by the lack of connections between business entities. This also includes transaction costs caused by the insensitivity of many managers to innovation at the initial stage. Subsequently, this can lead to huge costs for “catch-up”, which, moreover, often turn out to be ineffective.
Thus, the main task of quantifying transaction costs can be considered finding a compromise between the accuracy of information about the magnitude of such costs and their subsequent growth.
An attempt to divide the factors influencing the level of transaction costs led to their classification into external and internal. The effect of external (institutional) factors of these factors directly depends on government regulation. As practice shows, the complex interaction between various participants in an economic exchange is difficult to maintain without a third party monitoring how the parties fulfill the terms of the agreement.
In other words, to reduce transaction costs, a complex system of rules and restrictions on exchange is necessary. Given the multiplicity of economic entities and the diversity of their interests, establishing and maintaining separate systems of rules and regulations within each enterprise becomes very difficult. Therefore, the main task of the state in minimizing transaction costs is to form a system of institutions that will help ensure compliance with contracts, as well as monitor and supervise property rights. In this case, institutions mean developed formal (laws, rules, regulations, etc.) restrictions, as well as coercive factors.
In this sense, the state is an important element of the market mechanism, ensuring a reduction in uncertainty in relation to economic entities through the development of conditions, forms and rules for their socio-economic interaction. In addition to these institutions, there are also informal institutions (generally accepted norms of behavior, ethical standards, etc.). They play an equally important role, complementing and reinforcing formal rules. Unfortunately, informal restrictions are very difficult to influence, both from the state and from business entities, which is a very unfavorable factor in minimizing transaction costs.
In such conditions, it is necessary to achieve an effect in which the balance between institutions of multidirectional action would still reduce transaction costs. The effect of internal factors of this group of factors will depend on the actions of the management of a particular business entity. Often, to reduce transaction costs, business entities use non-standard models of economic organization, in particular, such as discrimination against consumer groups and territories of distribution of goods, imposition of forced assortment, related contracts, franchising, etc.
However, such measures may not always have a beneficial effect on the activities of the enterprise. As mentioned above, one of the most important factors influencing the growth of transaction costs is the lack of information. Different goods and services have many different properties, and the degree to which each of these properties is represented varies from one instance of the product (from one particular service) to another. Assessing the degree of manifestation of the desired properties requires too much effort to be complete and sufficiently accurate. The information costs of determining the degree of manifestation of individual properties in each unit of the exchange object give rise to the cost of this type of transaction. In such conditions, the administration of the enterprise cannot be sure that it is not overpaying for the purchased resources, goods or services, or that it is receiving the real price for the products.
In order to reduce the cost of operations to search for various alternatives to reduce transaction costs of an economic entity, it is most advisable to connect to information systems at various levels. As a result, it becomes possible to cover much larger areas of feasible economic solutions, up to global solutions, with much lower costs. Another internal factor that has a direct impact on the amount of transaction costs is the organizational structure of the enterprise.
If we follow the concept of organizing industry markets, then an enterprise as a separate subject of economic activity exists between two types of costs - transaction costs and costs of controlling the activities of the enterprise. The linear or linear-functional organizational structure of an economic entity, characteristic of most domestic enterprises, is characterized by low control costs and high transaction costs.
In this system, management control is carried out “vertically”: a superior manager controls the activities of a subordinate manager. Therefore, the linear organizational structure is characterized by a high degree of centralization of management and control of all aspects of the enterprise’s activities, which made it possible to minimize control costs. On the other hand, such a system is not flexible enough and often has a weak connection with the market, which ultimately leads to high transaction costs. As a rule, in such systems only limited specialized units, such as procurement, marketing, and sales departments, work with suppliers and consumers, which in turn leads to a strong dependence of the efficiency of the enterprise on the quality of work of these departments.
Progressive organizational structures, such as divisional or matrix, on the contrary, are characterized by a high level of control costs and low transaction costs. The low transaction costs of such systems can be explained by several factors:
- 1. Increased production flexibility allows you to organize a multi-product process on a large scale. The reduction in transaction costs may be due to the fact that many intermediate products will be produced within the enterprise, and this will reduce the number of external agreements and contracts.
- 2. Expanding the powers of managers of divisions, projects, and functional departments in terms of direct contacts with suppliers and consumers leads to increased communication with the market by obtaining a larger amount of diverse information, which allows minimizing transaction costs.
On the other hand, in a divisional structure, the division manager must personally monitor the main indicators of the current activities of his division (revenue, costs, profit). In a matrix structure, the implementation of full control seems to be an even more difficult task: managers of functional departments must monitor the quality of work performed, monitor the efficiency of the use of resources (primarily personnel), and also control the costs of their departments.
At the same time, project managers must coordinate the work of various departments, control deadlines, as well as revenue, costs and profits for the project. The central management apparatus monitors the activities of functional departments by analyzing progress reports, as well as the work of project managers using profit and return on investment indicators. This complication of the control system leads to an increase in control costs.
Thus, finding the optimal compromise between the magnitude of transaction costs and control costs seems to be a very difficult task for the management of an economic entity. The implementation of progressive management methods, in particular a controlling system, can significantly ease the task here.
This system is based on the division of the enterprise into various responsibility centers (cost, income, profit, investment centers), and by coordinating such centers and monitoring certain indicators of their activities, a reduction in control costs is achieved. At the same time, the implementation of a controlling system allows one to minimize transaction costs, since one of the conditions for its effective functioning is the creation of a unified information model, while maintaining all the advantages of progressive organizational structures.
Introduction
Chapter 1 An institutional approach to defining and classifying contracts, firms, and transaction costs
1.1 Market transformations and the formation of contractual relations 14
1.2 Transaction costs; classification, measurement 32
1.3 Neo-institutional interpretation of the company taking into account modern Russian characteristics
Chapter 2 Factors influencing the value of transaction costs 78
2.1 Institutional environment as a factor in the dynamics of enterprise transaction costs
2.2 The state in creating the conditions for minimizing transaction costs
2.3 Corruption and administrative barriers as a source of transaction costs
Chapter 3 Approaches to measuring transaction costs 132
3.1 Analysis of enterprise expenses in terms of identifying transaction costs
3.2 Features of identifying transaction costs in enterprise accounting data
3.3 Empirical studies of transaction costs of Russian enterprises
Conclusion 164
List of used literature 170
Applications 183
Introduction to the work
Relevance of the dissertation research topic. After the initial stage of reforms, the modern economic system of Russia entered a new phase of development. The basis of the economic model under construction is the contractual relations of economic agents that arise in the process of commodity exchange. The development of specialization and expansion of the exchange framework are among the fundamental factors of the country's economic growth and the well-being of the nation. At the same time, the exchange process itself involves financial, time, intellectual and other costs for its implementation - transaction costs. The transitional state of the economy presupposes an increase in the influence of traditional factors in the magnitude of transaction costs and the emergence of new sources. Today, when the external environment of activity of an individual company, the main element of the modern economy, has become less favorable, and the regulatory influence of the state has become more stringent, the role of the scientific approach in solving pressing problems of the influence of transaction costs on its activities is increasing sharply. At the same time, the search for economic methods that make it possible to identify their quantitative parameters as accurately as possible is of particular importance, since the traditional accounting approach used does not fully reflect the range of production and sales costs and leads to significant distortions.
The problem of transaction costs is especially relevant for domestic economic science. The state of high stability of the developed markets of the USA and Western Europe creates less effective incentives for the development of the theory of transaction costs than the unstable state of the Russian market, the unevenness of its development process, the underdevelopment of the institutional environment, the legal field and its mechanisms, and the uncertainty of the specification of property rights. Therefore, domestic science is faced with the task of critically analyzing the standard assumptions used in traditional models of foreign
institutional economics, and the development of new solutions that can take into account the specific conditions of the modern Russian market that arise in the process of its formation.
The fundamental foundations of neo-institutional economics were laid by the works of A. Alchiyan and G. Demsets 1, R. Coase 2 and D. North 3. The development of institutional theory at the present stage is carried out by a group of foreign scientists, in particular: O. Williamson, K. Menard, T. Eggertsson, M. Jensen, W. Meckling, P. Milgrom, J. Roberts, P. Joskow and others.
However, the models developed within the framework of institutional theory do not take into account the many features of a transition economy and possible variants of emphasis in the theory. The desire to minimize the risk of improper application of theories based on sustainable economic systems, protection from which is not provided by traditional methods, gives rise to the need to develop alternative models of behavior of economic agents in a transition economy, or at least adjust existing ones.
Despite the rich scientific heritage accumulated by many foreign economists, supporters of the institutional paradigm in the field of transaction costs, the first steps towards a theoretical solution to this problem in the context of transformation of the institutional structure were taken only in the 90s. Research undertaken in this area by D. North has proven the promise of this direction of scientific research. However, these works did not formulate a holistic theory of transaction costs and property rights during the period of change in the institutional environment, and also did not consider the possibility of using formalized methods for studying transaction costs in unstable developing markets.
1 Alchian A., Demsetz N. Production, Information Costs, and Economic Organization. American Economic Review, 62,
1972. P. 777-795.
2 Coase, R. H., The Firm, the Market, and the Law. Chicago, University of Chicago Press, 1937.
3 North D.C. Institutions, Institutional Change and Economic Performance. New York: Cambridge University Press,
1990.
Since the problem of contractual relations, property rights and transaction costs was not relevant for the Soviet economy, domestic scientists did not make a significant contribution to the theory of transaction costs. The formation and development of the market in Russia caused the emergence of relevant scientific research. Among them, one can note the works of S. Avdasheva, O. Belokrylova, R. Kapelyushnikov, R. Nureyev, A. Oleynik, V. Polterovich, V. Radaev, V. Tambovtsev, A. Shastiko, etc. However, the authors of most publications in recent years do not pay attention to sufficient attention to the study of the quantitative aspect of transaction costs. All the few similar calculations, for example in the works of S. Malakhov, underestimate the possibilities of practical application of the developed models.
This determined the need for theoretical developments based on models of foreign and domestic institutional economics and at the same time taking into account the peculiarities of Russian conditions, as well as empirical studies devoted to testing the comparative effectiveness of various models for assessing the quantitative parameters of transaction costs. The implementation of these studies is a necessary condition for the widespread introduction of methods of a scientific approach into the practice of measuring and analyzing transaction costs in the Russian economy.
The above allows us to conclude that the problems of studying transaction costs in their quantitative aspect and taking into account the characteristics of the modern Russian economy have not yet been sufficiently resolved and require active attention. This determined the choice of the topic of dissertation research. The complexity, multidimensionality and insufficient development of a number of theoretical and empirical issues of transaction costs, the objective need for their scientific understanding and comprehensive analysis determined the choice of goals, objectives, structure and content of this dissertation research.
The purpose of the study is to determine specific parameters, main factors, the essence and structure of transaction costs of Russian enterprises and develop a method for measuring them.
6 To achieve this goal, the following were decided main goals:
Analysis of the most recognized models of institutional economics,
generalization of known approaches to explaining nature and definition
specifically Russian conditions of transaction costs and studying
the possibilities of their application in the study of modern domestic
economics;
Study of the most significant factors of magnitude
transaction costs;
analysis of the characteristics of the Russian economy as determining conditions for the emergence of transaction costs;
identifying the shortcomings of existing approaches to measuring transaction costs;
searching for an information base for calculating transaction costs that is as close as possible to the daily activities of any company, studying its main features that influence the measurement results;
carrying out experimental calculations of transaction costs at the level of individual domestic enterprises.
Object of study is a modern Russian enterprise in the form of a complex complex of many contractual relations in the conditions of the formation of market relations and transformation of the institutional environment.
Subject of study- transaction costs arising in the process of exchange between economic agents and factors. their conditioning in the process of formation of market relations in Russia.
Theoretical and methodological basis of the study is represented by fundamental and applied works of foreign and domestic scientists in the field of neo-institutional economics, in particular, within the framework of: the theory of transaction costs, the theory of property rights, the theory of optimal contract, the theory of public choice, etc.
Instrumental and methodological apparatus research has become
the use of hypothetico-deductive and inductive methods of scientific
knowledge. When substantiating theoretical positions and arguing conclusions
During the dissertation work, general scientific methods were actively used:
comparative, structural-functional, analysis and synthesis. When deciding
specific problems of studying transaction costs in modern
in Russian conditions, methods of mathematical analysis were used,
applied statistics, econometrics: economic-statistical
groupings, forecast estimates, modeling of economic phenomena, time series, etc.
Information and empirical base of the study includes laws and regulations of the Russian Federation, data from the Federal Statistics Service of the Russian Federation and other official government bodies of Russia, non-governmental international and Russian organizations, materials from monographs and articles by domestic and foreign economists in periodicals, materials from scientific and practical conferences, reporting and accounting data of real Russian enterprises , as well as the results of the author’s empirical research.
Working hypothesis of the study is based on a system of theoretical and methodological views, according to which the structure and level of transaction costs of enterprises, which are an objective element of contractual relations, are the most important indicator of economic development. To increase the efficiency of the activities of subjects of the national economy, it is necessary to reduce their unproductive costs for organizing exchange relations, expressed in transaction costs. The basis of the directions for limiting transaction costs is to determine the sources of occurrence and factors of their dynamics, as well as the development of a method for the most accurate and complete measurement of the value of transaction costs at the micro level.
The provisions of the dissertation submitted for defense are
The formation and progress of market relations inevitably causes the expansion and dominance of the sphere of circulation, the degree of development of which largely determines the unhindered implementation of contractual relations with the minimization of transaction costs. The decisive role in creating and maintaining the necessary conditions for exchange relationships is played by the institutional environment of the economic system, the development of which and its adequacy are a key, complex factor in the transaction costs of contractual relations between enterprises. The current state of transforming Russian institutionalization does not contribute to solving these problems, which forces enterprises to turn to extra-institutional regulation of contracts, to shadow relations and, consequently, to incur significant transaction costs.
Transaction costs in the Russian economy that accompany the development of contractual relations in any of the existing definitions and classifications constitute a significant amount both at the macro level and at the level of firm contracts. Their high level is an indicator of the imperfection of the institutional environment of the Russian economy. “Government failures” in institutional support for the economic activities of enterprises, manifested in corruption and administrative barriers, coupled with the general underdevelopment of the institutional environment, become a specific factor in hypertrophied transaction costs in Russia.
The trend of the Russian economy has become the dependence of its comprehensive efficiency on the development of the sphere of exchange, the key indicator of the perfection of which is the level of transaction costs. This predetermines the need to search for methods for their most accurate and complete measurement. This problem is of particular importance in the study of the economic activities of an enterprise, since existing methods for measuring transaction costs either relate to the macro level or have the nature of expert assessments.
As the main source of information necessary to measure the transaction costs of enterprises, one should use their accounting and reporting data provided to external users, which most accurately and comparablely summarize the economic results of business. At the same time, standard reporting of Russian enterprises can only serve as a source of data for assessing the indicator level of transaction costs. Their exact values at individual enterprises can be assessed with in-depth additional processing of accounting data.
An effective method for measuring transaction costs at the enterprise level can be a two-level analysis of key cost items recorded in accounting data and standard reporting: commercial expenses; administrative expenses; non-operating expenses; general running costs; taxes and mandatory payments. These cost items should be analyzed, firstly, for approximate estimates of the total value of transaction costs and, secondly, for more accurate estimates, as a set of elements of a transactional and transformational nature.
An analysis of the expenses of individual enterprises of various organizational and legal forms proves their significant losses from transaction costs. Their main source is not so much direct unproductive losses of the enterprise, but rather the artificial inhibition of the expansion of exchange relations.
Scientific novelty dissertation work consists of identifying factors and specific parameters that have the greatest impact on the value of transaction costs in the modern Russian economy and developing a method for their assessment and measurement at the enterprise level.
Study of theoretical issues of transaction costs and empirical testing of the effectiveness of using models for their assessment in
conditions of the Russian market led To the following results, containing, in the author’s opinion, elements scientific novelty:
The specifics of the Russian institutional environment and its influence on the development of the contract system, which is characterized by underdevelopment and sometimes complete absence of institutions, one of the main functions of which is to reduce transaction costs, are shown. The dual significance of transaction costs, which are both an indicator of institutional imperfections and real losses of enterprises, is substantiated. The main negative role of transaction costs in the Russian economy is determined by their potentially high level for individual contractual relations and, as a consequence, by restraining the development of the sphere of exchange and the economy as a whole.
The key importance of the state in the institutional provision of the economy and its factorial influence on the level of transaction costs arising in the interaction of economic agents is revealed. Features have been identified and the specific impact of administrative barriers and corruption on the operating conditions of Russian enterprises has been determined, consisting in their widespread distribution, replacement of institutional regulation and self-reproduction, and manifested in a high level of transaction costs.
Existing approaches to the definition and classification of transaction costs are summarized, which made it possible to determine their components, structure individual elements and reasonably propose methods for measuring them at the enterprise level. Russian accounting and reporting data were selected as the most representative information base for quantitative analysis of transaction costs, allowing for comparability and retrospective analysis of transaction costs of individual enterprises.
The specifics of reflecting the results of economic activities of firms in Russian accounting have been studied, which has made it possible to identify
and its following features: complexity, integrality, multi-component indicators that affect the effectiveness of the economic assessment of transaction costs.
An original method for two-level measurement of transaction costs of enterprises has been developed, based on the analysis of standard reporting and detailed accounting data, which makes it possible to estimate the value of transaction costs, respectively, with a lower (indicative) and greater degree of reliability, and differs from existing methods by focusing on the direct calculation of transaction costs at the level individual enterprises.
The main indicators of external accounting and reporting are determined, indicating the level of transaction costs of the enterprise: commercial expenses, administrative expenses, non-operating expenses, general business expenses, taxes and mandatory payments.
A quantitative analysis of the external reporting of real Russian enterprises of various forms of ownership, organization and type of economic activity was carried out, the results of which reflect the main features of transaction costs: high level, variety of forms, significant differences in structure, dependence on the specifics of the enterprises’ activities and a tendency to growth.
Theoretical significance of the study is that it proves the need to revise some of the assumptions used in standard models of foreign institutional economics when developing a methodology for determining transaction costs w unstable emerging markets. The main provisions and conclusions contained in the dissertation can be used in the further development of the theory of transaction costs in a transition economy, which is characterized by changes in the main parameters of the institutional environment. The results of the study are applicable in the practice of economic analysis of transaction costs that have a negative impact on
relations of exchange, distribution and redistribution, pricing and integral efficiency of enterprises.
Practical significance of the study is that the results obtained can be applied to improve the quantification and analysis of transaction costs. The feasibility of the practical use of the solutions obtained for the problems of measuring transaction costs was confirmed when studying the level of transaction costs at specific enterprises. In addition, the results of the study can be used in teaching courses “Economic Theory”, “Institutional Economics”, “Cost Management” and “Pricing”.
Approbation of research results. The results and conclusions of the dissertation research were presented by the author at international, all-Russian, regional, intra-university scientific and practical conferences in Moscow, St. Petersburg, Samara, Sochi, Rostov-on-Don in 2001 - 2004. The methodological provisions proposed in the dissertation work are used at the enterprises of the North Caucasus Railway and at the Phoenix publishing house. Some results of the work were reflected in scientific research reports carried out with the participation of the author in 2002 - 2003. at RGUPS.
The main provisions of the dissertation research are reflected in 15 publications with a total volume of 6.4 pp.
Market transformations and the formation of contractual relations
The transition in Russia from a planned economy with the dominance of relations of direct distribution of goods and services to a market economy with the dominance of the sphere of circulation, and, consequently, a larger size of the transaction sector and the total volume of transaction costs, inevitably confronts us with the need for a deep rethinking of this phenomenon.
The growing interest in the study of transaction costs in modern economic science is partly explained by the unexpected results for researchers of the analysis of the dynamics of transaction costs in transition economies. Let us quote the exact statement of R. Coase: “If I were asked to show an economic system in which transaction costs do not exist, I would name an absolutely communist society”4. However, the dynamics of the structure of the post-Soviet Russian economy indicates that the removal of restrictions on the freedom of market transactions, i.e. in fact, the exchange of property rights leads to a significant increase in transaction costs. This is obvious both at the macro level with a qualitative analysis of the ratio of growth rates (decline) of the shares of transformation (industry, construction, agriculture, transport) and transaction (wholesale and retail trade, communications, financial and banking services, insurance, real estate, education, consulting and auditing services, market infrastructure, information technology, etc.) sectors5 in GDP, and at the micro level when analyzing the costs of individual enterprises. Note that in developed countries there is also an increase in the growth of the share of the transaction sector in the economy; it is based, however, on qualitatively different reasons (division of labor and deepening specialization, technological progress accompanied by an increase in the size of firms and the strengthening role of the government in relations with the private sector). The processes taking place in Russia obviously have the same direction. But the growth of the transaction sector of the Russian economy in absolute terms is not accompanied by an adequate reduction in transaction costs at the level of an individual transaction. In developed countries, the size of the transaction sector is very large; for example, back in 1970 in the USA, the size of this sector was 55% of the total gross domestic product. Accordingly, the share of resources necessary for its functioning is significant. But these costs support a high level of development of market infrastructure, specification and protection of property rights. For example, one of the ways to reduce transaction costs is to create effective legal regulation of economic relations between agents, based on a clear and unambiguous specification of the rights and obligations of the parties to the transaction. In the case of inadequate specification, which is typical for the modern Russian economic system, the law itself becomes a source of transaction costs, the desire to use legal norms decreases in society, companies turn to “shadow justice,” and the criminalization of society increases.
In Russia today we can observe a situation where there has been a significant growth in the transaction sector. But the resources spent on its maintenance are not compensated by the specialization of labor and the expansion of the framework of exchange. The underdevelopment of the specification and protection of property rights, market infrastructure, legislation, as well as corruption and administrative barriers prevent the benefits from specialization of labor and expansion of the sphere of circulation.
Therefore, focused attention on the exchange and contractual aspects of the relationship between economic entities is necessary when studying the problems of the modern Russian economy. The contract and its accompanying processes, phenomena and externalities, in particular such an important aspect of exchange relations as transaction costs, should play a key role in the analysis of the Russian economy at the present stage. A contract in each individual case is only a specific framework for the interaction of the parties involved in an exchange designed to increase the well-being of the parties, as Adam Smith spoke about7. In his fair opinion, the division of labor and specialization of production, which are the basis of economic progress, contribute to increasing the welfare of the parties to the exchange. Ignoring transaction costs, this is a very elegant design. The volume of production grows, because everyone produces only what they have a comparative advantage in, and social welfare grows accordingly. But in reality, the expansion of the sphere of circulation as a result of an increase in the scale of exchange made the service sector dominant in the most developed economies. Thus, the sharp increase in specialization and division of labor, which contributed to an increase in production, simultaneously increased the costs associated with exchange, quality assessment, measurements of many parameters of exchanged items, control over personnel, etc. The expansion of the scale of exchange inevitably led to an increase in the absolute value of transaction costs Yet the increase in these costs was offset by gains in productivity as a result of increased specialization and division of labor. Specific transaction costs per transaction have decreased. Yes, the result is positive. But its fruits were largely absorbed by the costs of exchange.
Transaction costs; classification, measurement
Transaction costs are a key term in neo-institutional economic theory, which has been rapidly developing in recent years. The lack of a generally accepted interpretation of this category causes scientific discussions and disputes. Transaction costs have deservedly received the epithet of “a well-chosen, unfortunate concept”32. In any case, when studying transaction costs, one must take into account that they exist in any real economic system, just as in any system there is uncertainty and opportunistic behavior of economic agents33. Despite the fact that “there are many schools of transaction costs” and many economists “lump together all the shortcomings of the market under the general name of transaction costs,” their very phenomenon deserves very serious attention.
The concept of transaction costs was introduced in 1930. XX century R. Coase in his article “The Nature of the Firm”35. It has been used to explain the existence of hierarchical structures that are antithetical to the market, such as the firm. We believe that R. Coase reasonably linked the formation of these “islands of consciousness” with their relative advantages in terms of saving on transaction costs. He saw the specifics of the company's functioning in the suppression of the price mechanism and its replacement with a system of internal administrative control.
Within the framework of modern economic theory, transaction costs have received many interpretations, sometimes diametrically opposed.
Thus, K. Arrow defines transaction costs as the costs of operating an economic system36. He compares the effect of transaction costs in economics with the effect of friction in physics; We suggest that this interpretation, despite its imaginativeness and originality, in some sense blurs the concept of transaction costs. Based on such assumptions, conclusions are drawn that the closer an economy is to the Walrasian general equilibrium model, the lower its level of transaction costs, and vice versa.
In a clearer, in our opinion, interpretation by D. North, transaction costs “consist of the costs of assessing the useful properties of the object of exchange and the costs of ensuring rights and enforcing their compliance”37. The need to reduce transaction costs becomes the main reason for the emergence of institutions.
Transaction costs exist not only in market economies, but also in alternative modes of economic organization and, in particular, in planned economies. Within the framework of an administrative-command economy, they take other forms, but their magnitude is more than significant. Thus, according to S. Chang, maximum transaction costs are observed in a planned economy, which ultimately determines its inefficiency38. Indeed, such an assumption has some basis, but at the same time, the complexity of measuring transaction costs proves the impossibility of an unambiguous view of this problem.
The structure of social production in an administrative-command economy is presented as a “single factory.” It is assumed that commodity relations in society are harmful because they stimulate selfishness, and they are viewed from a purely technological point of view. The possibility of centralized collection of all resources and all information and their systematic, optimal distribution is assumed.
In 1960 - 1970 At the Central Economics and Mathematics Institute, they created the theory of optimal functioning of the socialist economy - SOFE, which assumed the possibility of optimizing all flows at the level of the national economy, which they saw as a “single factory”. Naturally, this was only a theoretical model; it was not applicable in practice. The fact is that during its development the presence of transaction costs was not taken into account. In reality, three types of transaction costs prevent society from functioning as a single factory. These are measurement costs, costs of acquiring and transmitting information, and agency costs. But the property of a socialist state had to find in itself some mechanisms for implementation, and state planning became such a mechanism. The State Planning Committee was the center where all information about the production capabilities of all enterprises was collected and where forecasts were made, i.e., several resource allocation strategies were calculated in order to satisfy certain needs.
The system of material balances was a huge achievement of Soviet economic science. However, despite this amazing planning system, it should also be noted that it has a very significant negative side. The coarsening of estimates, teams, and strategies led, first of all, to a lag in the system of technological approvals for products. Although it is impossible not to note the built-in mechanisms to counteract the tendencies of coarsening: 1) military acceptance. In this case, the consumer is directly involved in production, and administrative levers work here; 2) consumer demand. Sometimes the consumer refused to buy low-quality products, and no one could force him to buy; 3) system of technological standards. The shortcomings of the Soviet planning system suggested certain ways of adapting to them: 1) nomenklatura adaptation, the so-called adjustment of plans. In fact, the adopted plan was not a plan, but a current system of guidelines that were given in kind to enterprises, their suppliers, and consumers; 2) financial adaptation. The credit system allowed the enterprise to attract additional resources and reduce the fragility of the existing planning system; 3) “residual principle”. Priority sectors and residual sectors were identified. If the entire system was not balanced naturally, then its current balancing was carried out at the expense of the remaining sectors.
The Soviet-type economy, thanks to these stabilizers, existed for quite a long time, although its inefficiency was inherent in the very mechanism of functioning.
The most appropriate definition of transaction costs for the purposes of our research is given by C. Menard. He sees them as the costs of “the functioning of the exchange system or, more precisely, within the framework of a market economy, what it costs to use the market to ensure the allocation of resources and transfer property rights”39.
Institutional environment as a factor in the dynamics of enterprise transaction costs
Economic agents make choices within certain limits determined by existing institutions that have an inertial dynamic and are often ineffective. However, the very existence of institutions is determined by limited rationality, the lack of ability to assess the market situation anew and fully calculate possible behavioral strategies. Therefore, the company operates within a certain framework of formal (enshrined in the system of current legislation) and informal (enshrined in the traditionally applied stereotype of behavior) institutions. The inefficiency of institutions structuring the activities of an enterprise causes an increase in the size of its transaction costs. Moreover, a single enterprise is objectively incapable of changing existing institutions. Of course, if this enterprise is not of the same scale as OJSC Gazprom or the Ministry of Railways of the Russian Federation, which actually independently developed the legislative framework for regulating the activities of OJSC Russian Railways, which arose on its basis. Institutions initially act as a determinant of the rules of action, laws and moral norms that structure economic relations and govern access to power and its use. It is believed that the emergence of institutions is due to the desire to save effort and resources spent. for the acquisition and processing of information, i.e. transaction costs. World Bank research confirms that the quality of institutions significantly influences countries' economic outcomes. It would be logical to assume that one of the main functions of institutions is to minimize the costs that firms spend on reaching agreements among themselves and ensuring the implementation of agreements, i.e. transaction costs.
In modern Russian conditions, the formal institutions necessary for the market are often simply absent, the existing ones are far from perfect, and the “soft” informal framework of interaction, such as morality, trust, business reputation, etc., is very undeveloped. In such a situation, business entities are forced to create their own technologies for interaction with counterparties and the state and, accordingly, bear increased transaction costs. The main advantages of institutions over individual forms of structuring the interaction of an enterprise with other economic agents include the effect of economies of scale. Thus, the value of transaction costs becomes an indicator of the degree of imperfection of the institutional environment for the effective functioning of the market. Quantitative estimates of transaction costs contained in some studies indicate that these unproductive social costs dictate the need for theoretical and practical rethinking of the existing Russian institutional environment and its adaptation to market relations.
The need for the process of transition to a market in modern Russia is practically not questioned by anyone. The differences are, perhaps, only in ideas about which “market model” has the best prospects. As a result, “market transition” has become a rather abstract concept. But it should be understood that the market is not only an aggregated set of individual exchanges and a relatively independent self-regulating system. The market is also a set of institutional restrictions within which the activities of economic agents occur. To understand the market mechanism the following steps are required; analysis of the construction of institutional forms in the everyday interaction of entrepreneurs, workers, consumers; clarification of the procedure for accessing resources and monitoring the activities of economic agents; consideration of the relationships that develop between entrepreneurs and government officials; identifying ways to form networks of informal exchange of services; studying the processes of formation of ethics in business relations.
A generally accepted and undoubtedly fair thesis in recent years has been the assertion that the legislative and regulatory framework of the Russian economy is imperfect. The adoption of laws takes years. But the main thing is that adopted laws are often not implemented, which is already associated with the imperfection of the enforcement mechanism. Both entrepreneurs and the population treat them quite disdainfully. Most entrepreneurs prefer to comply with laws “to the extent possible,” that is, if they do not interfere with the activities of the enterprise. Moreover, representatives of government bodies themselves often violate constitutional principles and federal legislation.
A striking example of non-compliance with established formal rules is the evasion of taxes by entrepreneurs. According to estimates by the Working Center for Economic Reforms under the Government of the Russian Federation, only 1.5% of Russian enterprises pay all taxes on time and in full. About two-thirds hide part of their income. And about a third of enterprises evade paying taxes altogether. Thanks to control measures in. In 2002, it was possible to add 220.6 billion rubles to the budgets of all levels, taking into account tax sanctions and penalties. True, the budget system has received 68.7 billion rubles from these funds so far, but this is 9 billion rubles more than in 2001.”
Tax evasion is considered completely legitimate from the positions of both entrepreneurs and public opinion and is becoming a recognized norm. It has become a common, justified and, moreover, natural element of an effective economic strategy. According to the Ministry of Taxes and Taxes as of June 1, 2004, out of 3.4 million legal entities registered in the Russian Federation, more than 0.5 million did not provide tax reporting or provided a “zero” balance. According to various estimates, the state annually receives up to 30% of the payments due. According to the “Office for Organizing the Investigation of Tax Crimes of the Ministry of Internal Affairs of Russia”, in 2003, only in criminal cases under investigation, the amount of damage amounted to more than 1.5 billion rubles, and this is only for crimes related to VAT refund100.
The most important circumstance of Russian reality, in our opinion, is that property rights in the Russian economy are not sufficiently specified. As Radygin A.D. and Malginov G.N. rightly point out? It is unclear where state ownership ends and private and corporate ownership begins101. Often, property formally belongs to one entity, and is used by another, and accordingly, it is simply impossible to determine responsibility. At the same time, entrepreneurs themselves are often interested precisely in the uncertainty of property relations. In such conditions, development strategies (usually informal) cannot but have a limited time horizon. The notorious shortage of investments in the real sector is associated with the lack of not only funds, but also the lack of long-term economic guidelines among agents who have such funds. Although recently there has been a significant revival of investment activity, it has a specific character. According to estimates by the Ministry of Finance of the Russian Federation, direct investment in fixed assets in 2003 amounted to 72 billion US dollars. Of these, only 6.5 billion are foreign direct investments102.
Analysis of enterprise expenses in terms of identifying transaction costs
Analysis of transaction costs in terms of their quantitative measurement is possible using two approaches: ordinalistic and cardinalistic. The first is based on taking into account the significance of only the direction of change in transaction costs. Consequently, only the relationship between different levels of transaction costs for a single act of economic interaction occurring in different organizational and contractual contexts is analyzed. “This problem is resolved through comparative institutional analysis to compare transaction costs under different contracting methods. Accordingly, what is important is the difference in transaction costs, not their absolute value.”147 The ordinalistic approach is currently dominant, which is largely explained, as we indicated above, by the “fuzzy” definition of the very concept of transaction costs.
The problem of measurability of transaction costs remains one of the main obstacles to the application of the theory of the same name in specific economic analysis. The question remains whether all types of transaction costs can be measured in monetary terms. Even the usual procedure for expressing in monetary terms the time spent on completing a transaction is imperfect due to the absence in many cases of intermediaries specializing in providing one or another aspect of the transaction (for example, negotiations). Even more questions arise when trying to estimate in monetary terms those costs that do not take an explicit form, for example, psychological discomfort arising due to the opportunistic behavior of a previously trusted partner or due to the insecurity of property rights. The situation with measuring transaction costs is associated with the same problem that lay at the end of the 19th century. at the heart of the debate about the measurability of utility. As an alternative to the cardinal method of measuring utility, J. Edgeworth and I. Fisher proposed an ordinalistic approach, which consisted only of analyzing the relationship between various levels of utility and abandoning claims to estimate their absolute value149. It is in this direction that transaction cost theory is moving.
Comparative analysis of transaction costs arising when completing a transaction in various contractual and organizational contexts is largely limited to expert estimates of their value. Ranking different options relative to each other can eliminate imperfect methods of measuring transaction costs in monetary terms.
The most generally accepted attempt to apply the cardinalistic approach to measuring transaction costs is the work of J. Wallis and D. North130. They introduce a distinction between transformation costs (related to the physical impact on an object) and transaction costs. Moreover, both are recognized as productive. Economic agents strive to reduce their total amount without making any distinction between them. Both the transaction function and the transformation function require real costs. Moreover, within certain limits, transformation and transaction costs are interchangeable. The authors themselves define these types of costs as follows: “Transformation costs are the costs associated with the transformation of costs into finished products, the costs of implementing the transformation function. Transaction costs depend on the inputs of labor, land, capital and entrepreneurial talent that are used in the process of market exchange151.” J. Wallis and D. North studied the dynamics of the transaction sector of the US economy (private and public) for the period from 1870 to 1970 (see table).
Total transaction costs consist of the following items. Firstly, these are the services of the “transaction sector” (it includes industries whose “products” are considered as entirely having a transactional purpose - wholesale and retail trade, insurance, banking, etc.). Secondly, these are transaction services, but provided within the “transformation sector”. When assessing them, the authors proceed from the size of the remuneration fund for non-production workers in the industries of this sector. (Relatively speaking, these are the costs of the “management apparatus”, the organization of sales and supply, etc. in industry, agriculture and other divisions of the “transformation” complex.) The border between the two selected sectors is drawn by the authors approximately, and not according to any clear criteria, which they themselves recognize. This measurement attempt is at the macro level and contains many controversial issues.
In particular, the determination of the total volume of transaction costs as the sum of costs for services of the “transaction sector” and costs for services provided within the “transformation sector” is based on their exclusively intuitive division. Thus, the subject of discussion may be the inclusion or non-assignment to the “transaction sector” in addition to wholesale and retail trade, insurance, banking, real estate operations1, which have an entirely transactional purpose, and also transport. In addition, it is very difficult to isolate the transactional component of the “transformation sector”. In this case, taking into account only the wage fund of non-production workers seems to be an overly simplified method of allocating the costs of transactions within the “transformation sector”. Indeed, in addition to the wage fund, the transaction sector within enterprises is represented by a very wide range of other costs. This will be discussed in more detail below.
Claude Menard, ATOM Center, University Paris - 1 - Sorbonne
In his book The Measure of All Things (2002), Alder highlights the significant differences in measurement systems adopted over the centuries in economic sectors operating within the same political system. For example, before the revolution at the end of the 18th century. in France and the associated introduction of the metric system, the weight of a “pound” of bread did not coincide with the weight of a “pound” of iron. This situation clearly hampered trade, allowing traders to engage in opportunistic behavior. In terms of modern economic theory, transaction costs turned out to be very high.
Economists' awareness of the importance of measurement problems was a long process, and it took even longer to develop relevant scientific concepts. The author of the concept of transaction costs belongs to the 1991 Nobel Prize winner in economics, Ronald Coase. Realization of the importance of this seemingly simple idea for economic theory and for our understanding of how “real” economies operate has been slow, and a significant number of its applications remain poorly understood today. Despite these difficulties, our understanding of transaction costs has advanced significantly over the past twenty years. The revolution that took place, which can quite rightly be called the “Coasian Revolution,” marked the beginning of two directions within the research program of the new institutional economics. The first direction concerns primarily institutions at the macro level that determine the general rules of the game when carrying out a transaction. Examples of such institutions, on which various options for organizing transactions and the amount of transaction costs depend, are the legal system, contract law, and property rights regime. The first direction in research is most often associated with the name of Douglas North, who also received the Nobel Prize in 1994. The other direction is associated with the study of the organization of transactions at the micro level, or, in the words of R. Coase, “institutional structures of production.” The main idea here is to recognize the existence of alternative options for organizing transactions, among which the most significant are markets, integrated firms and hybrid arrangements (for example, networks of firms). Transaction cost economics helps explain the emergence and nature of these different agreements, as well as the basis for choosing between them. Oliver Williamson played a decisive role in the development of this area.
Although I will draw on developments from both disciplines, this chapter will focus primarily on the conceptual underpinnings of these developments. The chapter includes several paragraphs. Section 2 analyzes the Coase theorem, which has become the source of numerous studies in economic theory, as well as in law and social sciences. The modern vision of the theoretical foundations is presented in § 3. Section 4 discusses the assumptions made by representatives of the new institutional economics. The main parameters of transactions are discussed in § 5. Factors influencing the value of transaction costs are the subject of § 6. In the last section we briefly discuss the issue of measuring transaction costs. In conclusion, the plots of this chapter are linked to other chapters of the textbook. In fact, this chapter deals primarily with theoretical issues, with brief reference to empirical data. The empirical data themselves are presented in detail in other chapters of the textbook, which are indicated by relevant references in the text.
The literature on the so-called “Coase theorem” is so vast that it is not possible to summarize even a small part of it here. My task is much more modest, it consists in presenting the theorem and describing the new perspectives it opens in economic analysis (and more broadly in related disciplines).
The idea that formed the basis of the theorem was proposed in R. Coase’s now classic article “The Problem of Social Costs.” This long article was first published in 1960 in the Journal of Law and Economics. However, the author himself does not talk about any theorem. He discusses welfare theories in detail, especially in the tradition of A. Pigou, who used the concept of externalities to explain the need for government intervention. Coase questioned this logic, arguing that a clear specification of property rights was the key factor in determining the potential role of the state and its limits. The background to the article is now well known, thanks in large part to the research of George Stigler (Stigler, 1988, p. 75 sq.). Coase's initial impetus for writing the article came from a review he did for the Federal Communications Commission, in which he questioned accepted radio frequency allocation practices. Coase mainly argued that if rights to use radio frequencies were clearly defined, then the market would ensure their efficient allocation. Then, during a seminar organized at the University of Chicago, he showed the applicability of his idea to all forms of property rights. As Stiegler vividly describes, the reaction of the audience changed within an hour from contemptuous disbelief to general enthusiasm. Later it was Stigler who called the Central Argument developed by Coase the “Coase theorem.”
Coase's article presents two versions of his basic idea, and their interpretation has been the subject of much controversy from the very beginning. In the first part of the article, Coase assumes the existence of a world with zero transaction costs, i.e. economic system in which coordination through the price mechanism occurs without costs, an assumption typically made in models of perfect competition. Under these conditions "the end result (which maximizes the value of production) is independent of the legal position [of the exchange parties] if the price system is assumed to operate without costs"(Coase, 1993, p. 94; emphasis added - Author). This statement can be called first Coase theorem. In a world with zero transaction costs, the final distribution of resources does not depend on the initial institutions (in this case, on the legal distribution of property rights). The point of this thesis is that if rights are clearly specified and the costs of their exchange are equal to zero, agents will be able to exchange their rights until a situation is reached where everyone is completely satisfied with the set of rights at their disposal. Indeed, “through market transactions it is always possible to change the original legal delimitation of rights” (Coase, 1993, p. 103). A similar result is obtained using the general equilibrium model without taking into account information costs. We emphasize that such an outcome requires a good specification of property rights. Based on the zero-cost assumption, a significant number of studies have emerged within the mainstream (mainstream) emphasizing the need for clear specification of rights to achieve optimal results.
The main problem with this interpretation is that the emphasis is placed solely on the specification of property rights, and the crucial assumption of zero transaction costs is forgotten. However, Coase himself constantly reminded that the main point of his argument was precisely to show the consequences of the existence of non-zero transaction costs, i.e. non-zero costs of using a price system (or any other technology for coordinating actions). If the existence of non-zero transaction costs is recognized, then the terms of exchange change radically. The main argument is developed in the sixth section of the article “The Problem of Social Costs”, and an entire paragraph from it deserves to be quoted verbatim. Coase begins the section by arguing that the assumption of zero transaction costs should in fact be considered “very unrealistic” (Coase, 1993, p. 103). Then he continues: “To carry out a market transaction it is necessary: to identify with whom it is desirable to conclude a transaction; disseminate information that someone wishes to enter into transactions and under what conditions; conduct negotiations leading to the conclusion of a transaction; conduct an investigation to ensure that the terms of the contract are being followed, etc.” (Ibid.). Once the costs associated with these actions are taken into account and cannot be avoided, “the initial delimitation of legal rights affects the efficiency of the economic system”(Ibid., p. 104; italics mine. - Auth.). This statement can be called second Coase theorem- and the only important one, in his own opinion. In fact, it is precisely because transaction costs exist and are significantly different from zero that alternative ways of organizing transactions, such as the firm, become significant. Only if there are non-zero transaction costs do institutions matter. The fundamental economic problem becomes “the selection of appropriate social institutions to help cope with the harmful consequences [of the existence of transaction costs]. All decisions have their costs...” (Coase, 1993, p. 107), and only a comparative analysis of the effectiveness of alternative institutional arrangements in reducing transaction costs should be considered a satisfactory approach, both from theoretical and practical points of view.
The research program of transaction cost theory and, more generally, of neo-institutional economics takes as its starting point the second theorem. An example of the concrete implementation of this program, among other things, can be considered the chapter with an analysis of post-Soviet privatization in this textbook. Although this chapter makes it clear that transaction cost theory cannot be considered a universal recipe, it nevertheless serves as a guiding thread in the process of restructuring institutions and organizations based on a clear specification of property rights, creating organizational structures that ensure their exchange, and comparing the costs arising from this. . What are the costs associated with the exchange of power, and how does the concept of transaction costs help solve specific economic problems?
Like any new idea, the concept of transaction costs cannot yet be considered fully established, which often leads to some confusion. To illustrate it, we refer to the significantly different definitions of transactions given in one of the most widely cited economic dictionaries, the New Palgrave (1987), by two well-known researchers. On the one hand, Jurgen Niehans identifies transactions as any exchanges on the market, i.e. reduces transaction costs to the costs of using the price mechanism, which is quite in the spirit of the works of Coase (Coase, 1937) and Arrow (Arrow, 1974). On the other hand, Stephen Cheng offers a broader interpretation of transactions, seeing in them any form of organization of economic activity. In the latter case, transaction costs refer to the costs associated with alternative organizational options, a view characteristic of the later Coase (1960; 1991), North (1981) and Williamson (1985).
It seems that the second approach prevails in modern literature because it better emphasizes the idea of the coexistence of alternative and competing options for organizing exchanges as a key characteristic of a market economy. Thus, I propose to call transaction any transfer of rights to use goods and/or services between technologically separated units . It should be noted that the proposed definition is not limited solely to transfer property rights. This would be tantamount to recognizing that transactions are exclusively transfers on the market. The emphasis placed on the right of use allows us to expand the concept: transactions are now taken into account both within organizations (for example, between divisions of a multidivisional firm) and within the framework of other agreements (for example, in a centrally planned economy), in which the transfer of rights is not associated with transfer of property rights. Thus, the transfer of property rights is a special case of a broader process.
The immediate consequence of the approach formulated above is that our understanding of the concept of transaction costs also expands. Here I will reproduce determination of transaction costs O. Williamson (Williamson, 1996, p. 28), according to which they include “the comparative costs of planning, adapting, and monitoring task performance associated with alternative management structures.” In other words, transaction costs arise in all types of transaction arrangements, including markets, so the key issue concerns the choice of the most effective of the available governance structure alternatives, as well as the role of the institutional environment as a determinant of this choice. The most illustrative example of transaction costs understood in this way would be the costs associated with the preparation and implementation of the contract. They consist of ex ante costs of developing, negotiating and including performance guarantees in the contract, as well as ex post costs associated with the incompleteness of the contract and the need to adjust it as it is implemented due to the identification of omissions, errors and unforeseen circumstances (Williamson, 1996, p. 379; Tirole, 1988, p. 29).
More generally, what are these costs? It is useful to distinguish between direct costs of organizing a specific transaction and indirect costs; derived mainly from the institutional environment (for example, the general costs of developing and applying contract law). In this section I will focus on direct costs (to return to the issue of indirect costs in § 7). As noted earlier, according to Coase (1937; 1960) and Dahlman (1979), costs are divided into ex ante (before the contract is concluded) and ex post (after). Ex ante costs are often defined as “ink costs” because they are associated with preparing the conditions necessary for the transaction to occur. Four aspects are particularly significant here. First, there are costs of finding a partner interested in completing the transaction. Secondly, it is necessary to evaluate the general terms of the transaction, not forgetting the likelihood of some events that are unpredictable in advance. Thirdly, even predictable events are sometimes very difficult to evaluate in such a way as to accurately determine the conditions for a transaction. This is why so many contracts are deliberately left incomplete. Fourthly, guarantees are required (collateral/deposit, etc.), especially in the case of transactions that lead to mutual dependence between their participants and/or are carried out between partners with an unknown or dubious reputation. Ex post costs relate mainly to the application of the provisions of the signed contract. Firstly, resources are usually required to bring the transaction to completion, i.e. to verify the fulfillment of contractual obligations by its parties. Secondly, with the exception of completely self-enforcing agreements, the completion of a transaction may require the intervention of a third party, a court, or an arbitrator acceptable to the parties to the transaction. The costs of third party intervention are particularly high if some characteristics of the transaction cannot be directly observed, or are only visible to those directly involved and not to the third party. Thirdly, given the incompleteness of contracts and changing circumstances, there is a need to adapt methods of organizing interaction to them, i.e. in the cost-intensive contract renegotiation process.
To summarize, we note that any option for organizing interactions requires resources. Conducting transactions on the market means using the price mechanism: searching and comparing prices, interpreting them, making payments, etc. The transfer of transactions within the company results in the emergence of intra-company bureaucracy and an increase in administrative costs. Planning transactions within the framework of intercompany agreements gives rise to the need for careful development of contracts and procedures for monitoring their execution, as happens, for example, in networks (for more information about networks, see Chapter II.2 of this textbook, written by A. Oleinik). In the simplest model, these costs can be represented as “taxes” levied when choosing one or another form of organizing transactions and affecting the budget constraint of the exchange participants..gif" border="0" align="absmiddle" alt=", where p is the relative price of their exchange, and the budget constraints of the participants and their preference functions are given (Fig. I.3.1 
)..gif" border="0" align="absmiddle" alt="and if the agent strives to change its content with the help of cost-related transactions, then as a result the budget constraint shifts from the original line formula" src="http://hi-edu.ru/e-books/xbook848/files/120-2 .gif" border="0" align="absmiddle" alt=".
As crude as this model may seem, it does a good job of illustrating the consequences of having non-zero transaction costs. As soon as resources begin to be required to organize interactions (in this case, to coordinate actions using the price mechanism), new restrictions automatically arise and it is possible that alternative mechanisms - a market or a network - may turn out to be optimal for the redistribution of use rights. So, the analysis of transaction costs cannot be separated from the procedure for choosing between alternative options for organizing transactions (see Chapter I.5 in this textbook, written by C. Menard). Economic agents face serious difficulties when making this choice, which makes it difficult for them to find effective solutions.
Why is this happening? Here we enter an area that gives rise to active debate and debate. Almost all economists who pay serious attention to transaction costs as a key factor in explaining the use of the benefits of the division of labor through the choice of the most adequate options for organizing transactions and promoting the development of significant institutions agree that human behavior does not fit into the framework of traditional approaches in economics. In fact, representatives of transaction cost theory (and new institutionalists in general) make two assumptions about human behavior that significantly diverge from the views of supporters of standard neoclassical theory. The first concerns the bounded rationality of agents, and the second concerns their opportunistic behavior. It is possible to explain the existence of transaction costs without these two assumptions. Indeed, a situation of radical uncertainty or asymmetry of information available to agents can give rise to transaction costs. However, the assumption of bounded rationality and opportunistic behavior of agents significantly strengthens the argument in favor of non-zero transaction costs, especially in conditions of mutual dependence between the parties to the transaction (this will be discussed in more detail in the next paragraph). We emphasize that it is the combination of the two assumptions that is significant. If agents were boundedly rational but not opportunistic, they could coordinate their actions, albeit at a cost, while avoiding contract enforcement difficulties. And if the agents were opportunists and perfect calculators at the same time, then they would be able to foresee and include in the contract all the necessary precautions.
The assumption that agents are only boundedly rational was originally formulated by G. Simon (Simon, 1957). This idea has been viewed with suspicion by economists, and many continue to reject its use because it makes mathematical modeling much more difficult than the standard hypothesis of perfectly rational agents. However, the number of references to this assumption in both microeconomics and macroeconomics is constantly growing. Perfect, or complete, rationality implies that agents make optimal use of all information available to them to maximize their utility, while bounded rationality means that agents have very mediocre abilities to search, process and adequately use available information. In other words, boundedly rational agents have:
- limited cognitive, or cognitive, abilities, which ultimately leads to them using only part of the relevant information. Even if in some ideal world all the relevant information were available to them, they would only include part of it in their calculations;
- limited ability to optimize their behavior based on processed information - their goal is rather a given level of satisfaction (satisfaction), rather than its maximization. Boundedly rational agents use much cruder and simpler criteria in their decision-making process than is usually assumed in standard textbooks (Simon, 1978, p. 6).
According to Simon, agents “strive to be rational, but they succeed only to a limited extent” (Simon, 1961, p. xxiv). From an economic point of view, most new institutionalists agree that economic agents are calculators; they compare benefits and costs when making decisions. But what really matters is the fact that such abilities are limited. It has the most serious consequences for economic theory. The “strong” rationality assumption made in most standard economic models is a belief in the ability of agents, despite all difficulties, to maximize and find the optimal solution. According to the “weak” assumption, formulated by Simon and formalized by Radner (1975), most often agents cannot make such calculations, and they are forced to make decisions on the basis of very vague ideas about the alternatives. Consequently, they are content with criteria that are simpler than maximization (for example, they set a price based on costs and some margin - see: Cyert, 1988, chap. 7, p. 120 sq.). Such assumptions raise serious theoretical difficulties, one of which is related to the need to introduce special (ad hoc) criteria (Langlois, 1990). A possible way to solve emerging problems would be to resort to a comparative perspective: agents do not focus on some ideal criterion for the optimal solution, but compare the advantages and disadvantages of a limited number of alternative solutions, choosing the one that seems most satisfactory and associated with the lowest costs. In other words, agents use a comparative approach, making decisions based on imperfect information and incomplete calculations. This is what Williamson (1985, p. 30) called the assumption of “average rationality” ( semi-strong rationality assumption). As a result, most decisions turn out to be suboptimal, but reasonable, made taking into account a very limited number of alternatives.
Acceptance of this assumption leads to the following consequences. Firstly, by constantly making suboptimal decisions, agents become generators of uncertainty, because those around them lose confidence in the correctness of their choice. Consequently, uncertainty becomes endogenous. Secondly, awareness of the limitations of their cognitive abilities can determine the desire of agents to expand the possibilities of choice through joint cognitive activity with others. Thus, the “awareness” of bounded rationality creates incentives for cooperation. Thirdly, knowledge about the limited abilities of others in processing information simultaneously gives rise to the desire to take advantage of this to one’s advantage through deception, shirking, etc. Such knowledge thus feeds the opportunism of agents.
Analysis of the consequences of bounded rationality quite logically leads to another assumption regarding the behavior of agents, namely opportunism. This assumption was repeatedly pointed out by Williamson, later Coase (1988b, chap. 4) and North (North, 1990, chap. 3, p. 17 sq.) joined the discussion, and alternative approaches to the phenomenon of opportunism are presented in the works of representatives of radical heterodox theories (Noorderhaven, 1996) and a number of sociologists (Granovetter, 1985). Radicals argue that the assumption of opportunism reverts transaction cost theory back to the mainstream because it is associated with the perception of people as calculators. Some representatives of social sciences similarly argue that this assumption is tantamount to admitting that people are not sufficiently socialized, which contradicts the results of several studies of social behavior. Such arguments are partially supported by recent developments in experimental economics, which suggest that social connections are important in explaining economic choice. The idea of agents' opportunistic behavior seems important for at least two reasons. On the one hand, it confirms the perception of economic agents as calculators, despite the presence of other motives in behavior, and this is quite consistent with the results of experimental economics. The ability to perform calculations opens up prospects for creating internally consistent models. On the other hand, an emphasis on opportunism does not exclude taking into account other behavioral motives. From the assumption of opportunism it does not at all follow that agents are complete egoists, ignoring others and devoid of any altruistic aspirations, and there is no place for trust or other motives in their behavior. A more flexible interpretation comes down to the fact that in a world where uncertainty, incompleteness and asymmetry of information reign, agents are busy searching for opportunities, and this requires calculations, and therefore justifies the existence of economic science. In other words, agents behave opportunistically in the sense that they “pursue self-interest using guile” (Williamson, 1996, p. 97). They behave selfishly not only in the limited sense that Adam Smith intended for this word, but also strategically, seeking to take advantage of emerging opportunities and turn invisible and/or difficult-to-verify events and actions to their advantage. In this sense, the opportunism of agents is arbitrary from the human capacity for adaptation and learning, which is studied within the framework of the cognitive sciences (North, 2003). The combination of opportunistic behavior with external factors such as uncertainties and market structures (for example, difficulties in finding an adequate replacement for a partner) produces the effect of “information shock” (Williamson, 1975, chap. 2, p. 31 sq.) and necessitates complex organizations and institutions, which become the main source of transaction costs. When statutes restricting opportunistic behavior are absent, social violence spreads. Corruption should be recognized as a clear illustration of opportunism (see chapters I.1 and II.2 of this textbook).
To summarize, we emphasize that the combination of bounded rationality and opportunism allows us to obtain a simple and reliable set of assumptions necessary to explain the coexistence of alternative organizational structures and the need for institutions that regulate economic behavior and make transactions possible. The search for adequate organizational structures that correspond to the parameters of transactions, and adequate institutions that help reduce transaction costs when making the largest possible range of transactions, becomes in this regard the main issue of both positive and normative economic science.
There are two approaches to the study of transactions, such as the transfer of ownership of real estate, and the associated transaction costs. One of them requires the identification of specific characteristics of a particular transaction that affect the amount of costs. According to the second approach, it is more important to study the common factors influencing the implementation of a number of similar transactions. Purchasing a house or other real estate is associated with both direct transaction costs of developing a contract that takes into account the specific terms of the transaction (for example, the seller’s liability in case of discovery of hidden defects in the building), and with costs that depend on the institutional environment (for example, legal requirements regarding notarization of transactions with real estate). In this paragraph I will dwell in detail on factors of the first kind, and in the next - on more global determinants of transactions. Of course, in reality, the two types of factors are largely intertwined and they are not so easy to separate.
Oliver Williamson played a key role in identifying the characteristics needed to model a particular transaction and explain variations in transaction costs. In his attempts to make the concept of transaction costs more operational, applicable to the analysis of alternative organizational structures, he gradually identified three main dimensions that are significant in explaining the magnitude of the costs arising in any given transaction. These dimensions are: the degree of uncertainty in the external environment, the frequency of the transaction, and the degree of specificity of the assets involved. The basic relationship can be represented in the following form:
where TC is transaction costs; U - uncertainty; F - frequency of transactions; AS - asset specificity.
Let's take a closer look at these parameters.
Uncertainty, accompanying the implementation of a transaction stems from two potential sources. Interior The source of uncertainty lies in the behavior of the parties to the transaction in conditions where it is impossible or too expensive to record and/or verify a number of actions. In a sense, we are talking about moral hazard. The external source of uncertainty is due to the inability to accurately predict emerging opportunities, which stimulates opportunism. Here we are closer to the situation of reverse selection (“selection of the worst”). An important question is whether interference between different types of uncertainty is observed, whether their amplitude increases, and whether they occur frequently. The main prediction made from the theory is that Frequent and mutually reinforcing uncertainties lead to increased costs in the market, thereby promoting the centralization of transactions within the firm. Coase also specifically emphasized the impact of uncertainty on transaction costs (Coase, 2000, p. 22 sq.; Williamson 1988, chap. 5, p. 65 sq.). He analyzed the now classic case of vertical integration of supplier Fisher Body into General Motors, linking the decision to abandon contractual relationships in favor of a single management structure with the desire to reduce uncertainty. Similarly, the formation of alliances between firms in high-tech sectors of the economy can be interpreted as the use of organizational structure to distribute the burden of costs arising from mutually reinforcing sources of uncertainty.
Another factor influencing costs and determining the choice of management structure is frequency carrying out a transaction, or the same type of transaction. The cause-and-effect relationship here is such that the more often an agent makes a certain transaction, the better he learns its characteristic features and the lower the transaction costs that arise. For example, a consumer faces higher transaction costs when buying a car than when buying spaghetti! The apparent obviousness of this cost determinant paradoxically prevents its detailed analysis: there are not many studies in this area. One reason for the lacuna in the research program may be the ambiguous nature of the influence of frequency on the choice of management structure. On the one hand, a frequently executed transaction, making it easier for participants to study its parameters, makes contractual interactions in the market preferable. On the other hand, frequent transactions of the same type stimulate the emergence of a routine, making control over their implementation easier, and this should be recognized as a factor in choosing in favor of an integrated company, because there is a saving on the costs of monitoring and control. Clearly, we can only repeat the thesis about the need for more empirical research on this issue. They are intended to confirm and clarify the prediction that As the frequency of a transaction increases, the associated transaction costs decrease.
The third characteristic of transactions was identified How degree of specificity assets involved. This variable has been the most frequently empirically tested variable in the recent transaction cost literature. The degree of asset specificity should be recognized as a particularly important factor in explaining choice between alternative management structures, and also for understanding internal characteristics of these structures, especially firms (formula" src="http://hi-edu.ru/e-books/xbook848/files/fr-Menard.gif" border="0" align="absmiddle" alt=", 2003). These aspects will be discussed in detail in Chapter I.5.1 (on organizational theory). It should be recognized that not everyone agrees with the thesis of asset specificity as the only determinant of the choice of organizational structure (Coase, 1988, chap. 4), and fierce debate continues around it. The idea that the level of transaction costs and, consequently, the choice of management structure is almost completely determined by the degree of asset specificity was formulated by Klein and his colleagues (Klein et al., 1978, p. 297 sq.). They define an asset as specific if its use provides a quasi-rent, i.e. “the excess of the value of [an asset] over the income from its best alternative use. The potentially appropriated portion of the quasi-rent is equal to the difference between the current value and the value to the best alternative user.” Williamson refines the concept (Williamson, 1985, p. 55; 1991, p. 282), complementing the idea of specificity with the idea reuse(redeployability). The fewer opportunities there are to use an asset in another transaction, the more irreversible the investment in it becomes and the more specific the transaction itself. This change of emphasis makes it possible to make the concept more operational, susceptible to use in empirical tests. In Williamson's words, “the specificity of an asset relates to the number of alternative uses it has, or the number of alternative users, while holding its productive value constant” (Williamson, 1991, p. 292). Resources that have no alternative in use (non redeployable) can be easily determined using the following criteria: a) they are usually associated with sunk investments; b) the identity of the parties to the transaction is significant, which makes continued interaction attractive; c) the resulting bilateral or multilateral dependence creates the need for effective defense mechanisms. Consequently, as already noted by Klein and his co-authors (Klein et al., 1978, p. 306), specific assets create a potential “lock-in” for transaction participants, creating incentives for their opportunistic behavior aimed at appropriating quasi-rent . Then the following critical prediction can be made: " ...as the specificity of assets and the size of appropriable quasi-rents (and, therefore, the potential gains from opportunistic behavior) increase, the costs of contracting will grow faster than the costs of vertical integration. Therefore, other things being equal, we will see cases of vertical integration more often"(Klein et al., 1978, p. 306; emphasis added - Author).
Researchers concerned with assessing the impact of asset specificity on transaction costs, and therefore interested in obtaining the ability to measure and empirically test, gradually discovered the main parameters of asset specificity. And here Williamson (1985, p. 72 sq.: 1991, in 1996, p. 106) played a leading role. He initially identified four components of asset specificity, to which he subsequently added a fifth, and Masten et al. (1991) drew attention to a sixth component. Briefly, the list of components is as follows. Specificity by location(site specificity) occurs if a two-way dependency is associated with the location of assets. For example, aluminum smelters are usually located near large power plants rather than bauxite deposits, since the production of aluminum from bauxite involves significant energy costs. After the completion of the construction of a metallurgical plant, a mutual dependence arises between it and the power plant, and of an asymmetrical nature: it is easier for electricity to find alternative uses. This stimulates the opportunistic behavior of the electricity producer. The aluminum smelter will try to reduce the risk of opportunism by either investing in its own electricity production (if legislation allows it) or entering into long-term agreements with energy companies (if legislation does not allow it to develop its own production). Physical specificity(physical specificity) characterizes assets with a special design and/or intended to use rare raw materials or components. An example here would be a computer designed to solve a narrow range of problems, such as military ones. Term dedicated, or target assets(dedicated assets) is used to describe investments made to satisfy the needs of a clearly defined consumer. In this case, the assets are not specific in themselves; they can be used for alternative purposes. But they are targeted in the sense that the amount of investment made is aimed at meeting the needs of a specific consumer. There is a risk of being taken hostage after making an investment. This appears to be what Klein et al. (1978) had in mind in their example of a printing company purchasing additional, specific equipment to meet the needs of a particular publisher. Human assets(human assets) can also be specific. Specificity in this case is not associated with qualifications, since skilled workers easily find alternative employment, but with specific knowledge and skills acquired by performing certain tasks or within certain relationships. Special teamwork skills are exemplified here. The four components of specificity listed above were mentioned by Williamson (1985, chap. 3). Brand-name capital as a type of specific investment was considered more recently (Williamson, 1991), and has not yet been the subject of much econometric testing (a detailed analysis in this perspective of the agricultural sector is presented in: Defining Time Specificity ( temporal specificity) was first considered by Masten et al. (1991) in connection with situations of mutual dependence of assets that arise as technological processes unfold. Indeed, some activities require a clear sequence of actions and, therefore, impose rigid time-fixed commitments. The result is a need for close coordination, resulting in complex and high-cost contracts. The example discussed by Masten and his co-authors concerns shipbuilding, in which all participants are forced to work under strict time constraints due to the presence of successive stages in the production process.
To summarize, we emphasize that the idea of transaction costs has undergone significant changes since its original formulation by Ronald Coase. The concept was significantly refined, and it became possible to identify the main cost components. Moreover, a relationship has been established between these components and variations in transaction costs. The basic relationship postulated at the beginning of this section can be clarified as follows (“+” and “-” reflect the direction of influence of a particular factor on the variation of transaction costs, i.e. the sign of the first derivative):
transition" href="part-006.htm#i908">Chapter I.5 “Organization Theory”. But before moving on to this topic, it is necessary to clarify the macroeconomic measurement of transaction costs.
Until now, the main emphasis has been on the microeconomic measurement of transaction costs: we have analyzed the components of a specific transaction that directly affect the magnitude of transaction costs and their variation. But the study of transaction costs is not limited to this. As pointed out in numerous books and articles by Douglas North, there are a number of factors that affect a wide range of transactions and determine the possibility of their implementation. The general level of transaction costs, which determines the total volume of transactions possible in a particular economy, depends on these factors.
Williamson (1996, p. 223) proposed the following diagram illustrating the interaction between the institutional environment, management structures and individuals from the point of view of transaction cost theory (Figure I.3.2 
).
The proposed three-level diagram summarizes the complex system of interactions that arise when making a transaction, with solid arrows on the left corresponding to the main directions of interaction, while the dotted arrows on the right correspond to secondary ones, both directions intersect within the framework of management structures. It is not possible here to analyze all dimensions of these interactions, although each of them influences the organization, characteristics and results of transactions. In Chapter I.5 we return to a discussion of the interactions between types of organization (or management structures). Here we will dwell on the connection between the institutional environment and the costs of organizing transactions derived from it. Over the past twenty years, some aspects of this connection have been studied in detail; these developments have become a serious contribution to the development of the direction of modern economic theory called “new institutional economics”. In the following discussion, I will particularly focus on three aspects that are most important in connection with the Coase theorem and the microeconomic component of transaction costs.
The first aspect concerns the size of the market and its influence on the organization of transactions. Both Coase and North often refer in this regard to Adam Smith, who explicitly formulated the idea that the larger the market, the more impersonal trading relations become and the more complex and costly transactions become (Smith, 1776, Book 1, chapter 3). Indeed, the process of exchange requires as a prerequisite a mechanism for coordinating and harmonizing the plans of individual individuals. When searching for other agents or organizations that can supply the goods or services of interest, agents face costs. In an expanded market, an employer’s search for an employee with the qualifications he is interested in is often associated with costs, as well as an entrepreneur’s search for a bank offering loan terms that suit him, and a tenant’s search for housing with specified characteristics. As Hayek (1945) emphasized, this is precisely the role of the price system: if markets are efficient, they provide that “local” and specialized knowledge of what is available, from whom, and at what price. If the costs of obtaining this information are non-zero, management structures alternative to the market may be more preferable.
But even in the market, as North (1981; 1984; 1991) notes, needs are almost never satisfied directly (maybe with the exception of “pure” autarky), but only through intermediaries, traders. As the number and variety of transactions increases, which is often highly desirable, the number of traders also increases, and transactions between them lose their personalized, personal character. This shift toward depersonalization of interactions has important consequences. “In personalized exchanges, family ties, friendships, loyalties, and recurring contracts frame the actions of the parties to the transaction while reducing the need for costly contract specification and enforcement procedures. On the contrary, in conditions of impersonal interaction, nothing prevents the opportunistic desire of the parties to the transaction to win at the expense of the partner. Consequently, as transaction costs rise, the need for a more detailed specification of the powers being exchanged increases” (North, 1984, p. 259). In other words, an increase in market size leads to the emergence of specific problems, and these, in turn, cause an increase in transaction costs or create incentives to develop mechanisms that allow a large volume of transactions to be carried out at lower costs (Stigler, 1968, chap. 12; Cheung, 1983 ).
It is to this idea that the main conjecture that forms the basis of Coase’s now famous article “The Nature of the Firm” (1937) comes down. In a decentralized market economy, an increase in market size leads to an increase in the number of price signals, a diversification of price negotiations, and an expansion of contractual agreements of various kinds. Under these conditions, the use of the market mechanism is associated with costs. By replacing a number of contracts with a single contract, firms can achieve lower transaction costs, thereby increasing the volume of transactions and reducing the price for consumers. The task of benchmarking then becomes to figure out how to more effectively organize a large volume of complex transactions: within the firm or within a network. This is a key issue in modern organization theory (see Chapter I.5).
The second aspect that must be taken into account to understand the problem of transaction costs at the aggregate level is related to the difficulties of clearly defining characteristics of the goods and services exchanged. Indeed, to exchange rights to use goods and services, it is not enough for agents to find an adequate “agreement” or “structure” that allows them to effectively compare their plans. They are also required to determine the characteristics of the goods and services that are the subject of exchange. These characteristics must be identified and appreciated. For this purpose, various transaction technologies are used, which correspond to different levels of transaction costs.
Most standard neoclassical models assume that agents set prices for goods or services to be sold. But for this they must first produce information about the significant characteristics of goods. S. Cheung (1983) convincingly demonstrated the importance of this aspect by comparing the costs of reaching agreement on the cost of a component of a complex product (such as a camera) with the costs of reaching agreement on the (assembled) product as a whole. These savings can become a source of comparative advantage for “firms” over transactions between autonomous traders: the manufacturer of a camera component knows more about it than the consumer, so reaching agreement between specialists and component owners than between component owners and consumers. This makes clear the comparative advantage of the “entrepreneur,” understood as the “expert” who collects and processes information. The firm is therefore seen as an information-processing structure alternative to markets (Alchian and Demsetz, 1972).
Two characteristics of goods and services pose particular challenges to identification. The first concerns the difficulties of defining quality. General equilibrium models are built on the assumption that goods of different qualities are exchanged in different markets, i.e. the problem of quality measurement is easily solved. But what happens if quality is not easy to identify and therefore differentiating markets is difficult? In most cases, quality is “certified” by organizations and institutions: the characteristics of fresh products are certified by state inspections and other regulatory authorities, the skills of doctors are certified by professional associations, etc. The second difficulty relates to issues of separability. In the case of joint production, it is often impossible to clearly indicate how much of the cost is attributable to a particular product. An advertising campaign for a specific model of an automobile manufacturer can have a positive impact on the sales volume of other models from the same manufacturer. The problem becomes especially acute when working “in a team,” or when a company shares some resources with network partners (for example, when jointly investing in R&D). The risk of a “free-rider problem” leads to the emergence of mechanisms for coordination and conflict resolution within a market economy.
These difficulties in identifying the specific characteristics of goods and services are related to the related problem of measurement. Transfer of rights involves assessing the characteristics of the goods exchanged or the performance of the agents providing the services. Given uncertainty about the components of goods or the capabilities of service providers, many characteristics are difficult to determine in advance, making measurement arbitrary. Technicians involved in car or computer repairs are unlikely to be able to accurately determine the work schedule in advance, and its quality cannot always be assessed even after the work is completed. Measurements are most often nothing more than approximate estimates(proxies) exact values. This can be seen as one of the reasons for the prevalence of the hourly rather than piece wage system. The problem at hand creates uncertainty and opens up opportunities for opportunistic behavior in measurement. The result is high transaction costs. Again, the solution lies in the application of institutional rules, creating measurement systems to ensure homogeneity of comparisons. Laws are passed to limit the risk of opportunism (eg standards for categorizing fresh tomatoes). But such institutional means lead to an increase in total transaction costs, which become a component of the costs of carrying out specific transactions.
Moreover, the application of institutional rules is by no means automatic. Hence the third component that influences the overall level of transaction costs: rules, laws and organizations that facilitate coordination and reduce information asymmetries at the aggregate level require special institutions for their functioning. law enforcement And enforcement agreements.
Let us recall the introduction of a system of weights and measures. The establishment of a homogeneous system of weights and measures requires traders to become familiar with it, which is achieved by a number of actions, from educational programs to advertising of new standards. Relevant examples include the unification of weights and measures (the introduction of the metric system after the French Revolution of 1789), the introduction of the euro in some European Union countries, or the standardization of fresh agricultural products (for example, the sizing of fruits and vegetables). Continued investment is needed in institutions that support and propagate such mechanisms to facilitate transactions and protect them from opportunistic agents.
More generally speaking, the organization of transactions in a market economy is impossible without clearly defined and protected property rights, development and application of contract law. A good example of complex institutions as the basis of a market is the introduction of trademarks in those countries where they have long been ignored (see: tagging ">policing) and coercion (enforcement)" (Dahlman, 1979, p. 148), which are implemented through the introduction standards and development of rules. As North (1991) emphasizes, “in an ideal world with perfect enforcement, disputes would be resolved fairly and cost-effectively by having a third party determine the amount of compensation to the injured party in the event of a breach of contract. Opportunism, shirking and deception would make no sense in such a world. But this ideal does not exist. The creation of a relatively fair legal system capable of enforcing contracts has become an extremely important prerequisite for economic development." But the emergence of such "institutions" is always associated with costs. Regardless of whether it is a private order based on agreements between traders in the absence of a clearly defined institutional environment (as was the case with the Law Merchant that arose at medieval fairs, see Milgrom, North and Weingast, 1989), or same about public order established and maintained by the government. In both cases, dissuasive and reliable punishments should be established, mechanisms for their imposition should be launched, and persons responsible for rendering verdicts should be appointed. An example is the development in all market economies of legal systems aimed at implementing the laws of commerce. Without a doubt, development in this direction leads to increased costs of legal defense. On the one hand, it allows transactions to be carried out on a larger scale: with a well-designed legal system, the total volume of transactions grows exponentially. On the other hand, the corresponding costs affect the amount of expected income and expenses from transactions. As a result the total transaction costs caused by contract enforcement decide a lot. When legal costs are too high, agreements are compromised because potentially profitable deals are hampered by high enforcement costs. “Legalization” (judiciarizalion), which initially facilitated transactions, can turn into a serious obstacle to further development. This problem leads us to the extremely interesting subject of comparison and evaluation of legal systems, which is of increasing interest today.
In the previous paragraphs we described progress in identifying the transaction attributes that are associated with the underlying factors that explain the existence of alternative governance structures and the choice between them. There has also been progress in understanding the role of the institutional environment as a key determinant of transaction costs. However, one important and controversial question remains: can these costs be measured?
As with many other concepts in economics (for example, opportunity cost), measurement problems are not trivial and give rise to lively debate. Many opponents of transaction cost theory consider this concept to be tautological, too comprehensive, basing this pejorative opinion on the impossibility of precise identification and measurement. Proponents of transaction costs are also far from a homogeneous group. Some of them believe that the concept of transaction costs is similar to other economic concepts (for example, opportunity costs), which exclude direct measurement and allow only comparative assessment. Transaction costs, at best, make it possible to correlate choices, but not to establish drastic measures. When measurement is still required, as in the case of determining the degree of specificity of assets, it is proposed to make it using approximate estimates (proxies), by analogy with other economic concepts. Other supporters of the theory of transaction costs are convinced of their measurability, and see this as a priority task, indicating the scientific validity of the concept. We do not intend to develop arguments either for or against here. The roots of this discussion go deep into theory and even further into the history of science.
But for readers seeking to understand what is happening within the framework of transaction cost theory, it is of some interest to become acquainted with two pioneering and influential experiments in the direct measurement of transaction costs. We chose them not only because they were among the earliest attempts at measurement, but also because they represent two extremes of the spectrum of possible approaches. It is possible, on the one hand, to use a narrow definition of transaction costs to process data collected at the micro level, and, on the other hand, to resort to a broad, aggregated definition.
At one end of the spectrum Demsetz's study (Demsetz, 1968) is located. In his article, Demsetz tried to measure the transaction costs that arise in a specific market at a specific point in time. The starting point for the study was a narrow interpretation of transaction costs, i.e. costs of exchanging property rights. The author proceeded to measure the costs of trading stocks on the New York Stock Exchange (NYSE). In this market, as transaction costs, he identified brokers' remuneration and the difference between the purchase price and the sale price (ask-bid spread), and this difference was interpreted as a premium for the agreement of agents to quickly and efficiently exchange property rights in an organized market. At the same time, this difference is the remuneration of persons specializing in transactions on the NYSE. The remuneration is paid for:
- special skills that traders acquire as information custodians, making it easier for them to monitor client orders and making it more effective than if clients carry out transactions independently;
- their willingness to accept risks associated with possible delays in transactions, since they determine the costs of waiting between the moments of purchase and sale and the costs of creating inventories.
The collected data shows that brokers' remuneration represents approximately 60%, and the difference between the purchase price and the sale price - approximately 40% of transaction costs, and all together these costs do not exceed 1.3% of the cost every transaction. This seemingly insignificant amount is nonetheless significant when one considers the narrow definition of transaction costs, the frequency with which this type of transaction occurs, and the fact that these costs arise in a highly competitive market that approximates the characteristics of a perfect market. The study also notes a number of other organizational aspects of the market that affect transaction costs: the advantages of an “organized” market, economies of scale with frequent transactions, the advantages of routinization, etc. But the main conclusion of the article is that transaction costs are significant at the micro level of financial markets.
The role of transaction costs can be significant and at the other end of the spectrum, in the study of aggregate indicators. Based on a detailed and comprehensive analysis of the American economy between 1870 and 1970, North and Wallis (1986) showed in another now classic study that transaction costs reached up to half of US GNP by the end of the period under review. To estimate transaction costs, the authors used a broader definition. They defined transaction costs as “the costs of obtaining benefits from specialization and division of labor” (North and Wallis, 1986, p. 96). To give the definition an operational character, the authors divided all types of economic activity into those that are associated with the transformation of raw materials and components into the final product (“transformation function”), and those that ensure the organization of exchanges (“transaction function”). From this point of view, transaction costs are considered “the economic value of the input resources used to provide the transaction function” (Ibid., p. 97). However, these costs are very difficult to estimate (for example, the cost of searching for information by the consumer to make a decision on making a transaction). Therefore, the authors take into account only transaction services, i.e. “that portion of costs that is valued by the market,” analogous to the System of National Accounts procedure for estimating income (measuring market income rather than total income).
North and Wallis identify three main components of transaction services. Firstly, there are “transaction sectors of the economy”, i.e. sectors that support transactions: finance, insurance, wholesale and retail trade, real estate agencies. Secondly, transaction services within firms are highlighted, which are more difficult to measure. Defining a company as a “bundle of contracts” (Ibid., p. 100), the authors include among transaction services: a) all costs for the transmission and processing of information along the entire chain from the head of the company to ordinary employees engaged in the transformation function; b) all costs of monitoring contracts, especially labor contracts; c) all costs of promoting the final product to the market. Therefore, transaction services for a firm include: a) all costs that would not arise if the product were consumed within the firm, and b) all costs associated with intermediate functions. Due to measurement difficulties, transaction services within the firm were equated only to labor costs (although tangible assets are also involved), therefore, most likely, there was an underestimation of the total transaction costs in the firm. Thirdly, there are transaction costs in the public sector, derived from the institutions that ensure transactions. And here we are faced with a difficult choice, since in the “broad sense” all state activities have a transactional orientation. But some government services are associated with various types of transfers, i.e. redistribution of income, which has little to do with transaction services (although the transfers themselves require some transaction services). Consequently, the authors limit the measurement of government transaction services to: a) basic costs of protecting property rights and facilitating exchange (including defense); and b) that part of social overhead costs (education, public transport, utilities) that represent “transaction services regarding the production and distribution of government-supplied goods and services” (Ibid., p. 118).
The main findings can be summarized as follows. The share of all wage earners involved in the production of transaction services in the private sector increased from 15% in 1870 to 38% in 1970. Resources spent on transaction services in non-transaction sectors of the economy (from 2.16% of GNP in 1870 to 10.4% in 1970) plus similar costs in transaction sectors (trade: from 16.14% of GNP in 1870 to 18.25% in 1970; and FIRE - from 4.19% in 1870. to 12.15% in 1870) represent a significant - and ever-increasing - share of the private sector. According to rough estimates, this share grew from 18% of US GNP in 1870 to 41% in 1970. As for the public transaction sector, the authors proposed two estimates of its size, the minimum (which considers the entire government as a non-transaction sector of the economy and takes into account only those government employees who supply transaction services) and maximum (including defense). According to the minimum estimate, the growth of transaction services was from 1.71% of GNP in 1900 to 5.86% in 1970, according to the second - from 3.67% in 1900 to 13.9% in 1970. Adding up private and public transaction costs, we obtain an estimate of their total volume from 24.19-26.09% of GNP in 1870 to 46.66-54.7% in 1970.
The definitions used by the authors have been repeatedly called into question, as have their classification of costs and, consequently, their resulting estimates. However, the important conclusion that can be drawn from this study is that regardless of the definitions used and no matter how imperfect the data, transaction costs turn out to be very significant, and they significantly influence the organization of the economy at the macroeconomic level.
In conclusion, it is worth recalling the still controversial nature of direct measurement of transaction costs (similar to direct measurement of opportunity costs). The main aspects of our knowledge about measuring transaction costs are as follows: there are attempts to measure them and additional efforts are required in this direction, because even failures are useful for clarifying basic concepts; transaction costs are very significant at both the micro and macro levels, regardless of the definitions adopted and the measures used.
This chapter has emphasized the theoretical contributions to transaction cost theory from Coase to North to Williamson and others. Particular emphasis has been placed on the fact that Coase's theorem is relevant to a range of methods for the practical transaction analysis of economies. Once it is recognized that transaction costs are non-zero and that the organization of transactions is important for enjoying the fruits of the division of labor and ensuring growth, the fundamental question of economics becomes: “Which organizations and which institutions best facilitate transactions?”
To answer this question, the theory of transaction costs has developed a number of agreed upon concepts with the help of which it is possible to model organizations and institutions. The contents of this chapter can be summarized using the following diagram (Figure I.3.3 
).
As follows from the lower part of the diagram, as well as the explanations in the text of the chapter, the main task of the new theoretical apparatus is to explain real phenomena, and not to search for additional confirmation of neoclassical models. The reader will find the most obvious applications of transaction cost theory discussed in subsequent chapters. In the study of organizations, transaction cost theory offers a new perspective on contracts, most of which are incomplete and therefore involve the need for protective mechanisms and enforcement (see Chapter I.4). More generally, this theory explains the coexistence of alternative ways of organizing transactions and the continuous choice between them (Chapter I.5), as well as the resulting situations of irreversible choice, called Path Dependency (Chapter I.6). Transaction costs also depend on the institutional environment. Modeling an efficient market economy is impossible, as North argues, without taking into account a complex set of formal and informal institutions. Informal institutions can play a positive role if trust is deeply rooted, but they can also hinder the development of exchange in the absence of trust or, even worse, leading to a sharp increase in transaction costs through corruption and illegal practices (chapters II.2 and II.6). Formal institutions have also attracted considerable attention, especially among political scientists and lawyers. Indeed, today we better understand the role of various political systems, especially federalism, in guaranteeing the security of transactions and traders, as well as the central role of the legal system in protecting property rights (chapters II.1, II.5 and II.6).
The main takeaway from this chapter is that you should keep the theoretical framework described in it in mind as you read some of the other chapters. But we must not forget that transaction cost theory is a relatively new field, and much remains to be done.
In this chapter, I have put most of the emphasis on the theoretical contribution of transaction cost economics, from Coase to North, Williamson, and the like. I have done so in suggesting that there is a red line linking together the Coase theorem and the tools that transactional analysis provides for analyzing economies. More precisely, once we acknowledge that the economic world is permeated by positive transaction costs and that organizing transactions is fundamental to take advantage of the division of labor, thus making growth possible, the fundamental question in economics becomes: what organizations and what institutions can provide the best support for the development of transactions?
In order to answer this question, transaction cost economics has developed an integrated set of concepts, which is the basis on which to build models of organizations and institutions. The content of the chapter can be summarized in the following graph (Fig. I.1.3).
As suggested by the bottom part of this graph as well as by several references in the chapter, the main point of this theoretical apparatus is that it is designed to provide explanations of real phenomena, and not to define an ideal benchmark as in neoclassical models. In that respect, the theory presented here finds applications on many issues developed in the next chapters, as will rapidly become apparent to the reader. On the organization side, transaction costs economics provide a fresh view on contracts, understood as fundamentally incomplete and therefore, in needs of safeguards and enforcement procedures (Saussier, Chapter I.4 of this book). More generally, it explains the simultaneous existence of different modes for organizing transactions and the continuous tradeoff at work among these forms (note">American_Economic Review, 62 (5): 777-795.
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Keith B. Leffler, Randal P. Rucker and Jan A. Munn (2000), “Transaction Costs and the Collection of Information: Presale Measurement on Private Timber Sales,” Journal of Law, Economics and Organization, 16(1), 166-88.
In the economic literature there are many classifications and typologies of transaction costs. The most common typology is the following, which includes five types of transaction costs:
1. Costs of searching for information. 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 the relevant goods and factors of production, and what the current prices are. Costs of this kind consist of the time and resources required to conduct the search, as well as losses associated with the incompleteness and imperfection of the acquired information.
2. Negotiation costs . The market requires the diversion of significant funds for negotiations on the terms of 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. In the act of exchange, only some of them are inevitably taken into account, and the accuracy of their assessment (measurement) can be extremely approximate. Sometimes the qualities of a product of interest are generally immeasurable and to evaluate them one has to use surrogates (for example, judging the taste of apples by their color). This includes the costs of appropriate measuring equipment, the actual measurement, the implementation of measures aimed at protecting the parties from measurement errors and, finally, losses from these errors. Measurement costs increase with increasing accuracy requirements.
Enormous savings in measurement costs have been achieved by mankind as a result of the invention of standards for weights and measures. In addition, the goal of saving these costs is determined by such forms of business practices as warranty repairs, branded labels, purchasing batches of goods based on samples, etc.
4. Costs of specification and protection of property rights . This category includes the costs of maintaining courts, arbitration, government bodies, the expenditure of time and resources6 necessary 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 occurs when one party to a contract relies on another party, and obtaining actual information about his behavior is costly or impossible. The most common type of opportunistic behavior of this kind is shirking, when the agent works with less efficiency than is required of him under the contract.
Particularly favorable conditions for shirking are created in conditions of joint work by a whole group. For example, how to highlight the personal contribution of each employee to the overall result of activities<команды>factory or government agency? We have to use surrogate measurements and, say, judge the productivity of many workers not by results, but by costs (such as labor time), 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.
In private firms and government agencies, special complex and expensive structures are created whose tasks include monitoring the behavior of agents, detecting cases of opportunism, imposing penalties, etc. Reducing the costs of opportunistic behavior is the main function of a significant part of the management apparatus of various organizations.
The second form of opportunistic behavior is extortion. Opportunities for it appear when several production factors work in close cooperation for a long time and become so accustomed to each other that each becomes indispensable and unique to the other members of the group. This means that if some factor decides to leave the group, then the remaining participants in the cooperation will not be able to find an equivalent replacement 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. Costs of isolation (similar to “shirking”).
2. Information costs.
3. Costs of scale
4. Costs of behavior.
With the introduction of transaction costs into the analysis, it is necessary to clarify the firm's cost structure.
In a market economy, a company’s costs can be divided into three groups: 1) transformational, 2) organizational, 3) transactional.
Transformation costs are the costs of transforming the physical properties of products in the process of using production factors.
Organizational costs are the costs of ensuring control and distribution of resources within the organization, as well as the costs of minimizing opportunistic behavior within the organization.
Transaction and organizational costs are interrelated concepts; an increase in some leads to a decrease in others and vice versa.
In modern economic analysis, transaction costs have received operational application. Thus, in some studies, the impact of transaction costs on supply and demand is similar to the introduction of taxes.
Also, the use of transaction (TC) costs allows us to express through them the demand function for institutions when analyzing institutional equilibrium and institutional dynamics. The supply of institutions “in the institutional market” is the cost of collective action (CAC).
Rice. 1. The impact of transaction costs on supply and demand
SAC is the marginal cost of creating institutions, TC expresses the marginal utility of institutions, expressed through their opportunity cost in the form of transaction costs.
Transaction costs and specification (erosion) of property rights
This problem is studied mainly within the framework of the modern theory of property rights. The main task of property rights theory is to analyze the interaction between economic and legal systems.
The theory of property rights is based on the following fundamental principles:
1) property rights determine what costs and rewards agents can expect for their actions;
2) restructuring of property rights leads to shifts in the system of economic incentives;
3) the reaction to these shifts will be the changed behavior of economic agents.
The theory of property rights is based on the basic idea that any act of exchange is essentially an exchange of bundles of rights.
According to Demsetz: “When a transaction occurs in the market, two bundles of property rights are exchanged. A bundle of rights is usually attached to a particular physical good or service, but it is the value of the rights that determines the value of the goods exchanged... Economists usually take the bundle of rights as given and seek an explanation of what determines the price and quantity of the exchangeable commodity to which these rights relate.”
The wider the set of rights associated with a given resource, the higher its usefulness. Thus, an own thing and a rented thing have different utility for the consumer, even if physically they are completely identical.
Economic agents cannot transfer more powers in an exchange than they have. Therefore, the expansion or narrowing of their existing property rights will also lead to changes in the conditions and scale of exchange (an increase or decrease in the number of transactions in the economy).
As a starting point for analysis, Western theorists usually turn to the private property regime. They understand the right of private property not simply as an arithmetic sum of powers, but as a complex structure. Its individual components mutually determine each other. The degree of their interconnectedness is manifested in the extent to which the restriction of any power (up to its complete elimination) affects the implementation by the owner of other powers.
The high degree of exclusivity inherent in private property has two behavioral consequences:
1) the exclusivity of the right (usus fructus) presupposes that all positive and negative results of the activities carried out by him fall on the owner and only on him. He therefore turns out to be interested in taking them into account as completely as possible when making decisions;
2) the exclusivity of the right of alienation means that in the process of exchange the thing will be transferred to the economic agent who offers the highest price for it, and thus an efficient distribution of resources in the economy will be achieved.
Western economists' defense of the private property system rests precisely on these efficiency arguments. They consider the precise definition of the content of property rights to be the most important condition for the effective functioning of the economy.
Excluding others from free access to a resource means specifying ownership rights to it.
The specification of property rights contributes to the creation of a stable economic environment by reducing uncertainty and creating stable expectations among individuals about what they can get from their actions and what they can expect in their relationships with other economic agents. To specify the right of ownership means to accurately determine not only the subject of property, but also its object, as well as the method of vesting it.
Incomplete specification is interpreted as an attenuation of property rights. The meaning of this phenomenon can be expressed by the phrase - “no one will sow if the harvest goes to someone else.”
The erosion of property rights can occur either because they are poorly defined and poorly protected, or because they are subject to various types of restrictions, mainly from the state.
Since any restrictions rearrange the expectations of an economic agent, reduce the value of a resource for him, and change the terms of exchange, the actions of the state are a priori suspect among property rights theorists.
It is necessary to distinguish between the processes of differentiation (splitting) and erosion of property rights. The voluntary and bilateral nature of the splitting of powers guarantees in their eyes that it will be carried out in accordance with the criterion of efficiency. The main benefit from the dispersal of powers is seen in the fact that economic agents have the opportunity to specialize in the implementation of one or another partial power, which increases the efficiency of their use (for example, the right to manage or the right to dispose of the capital value of a resource).
In contrast, the unilateral and coercive nature of the restriction of property rights by the state does not provide any guarantee of its compliance with the criteria of effectiveness. Indeed, such restrictions are often imposed in the selfish interests of various lobby groups.
In reality, it is very difficult to separate the processes of splitting from the processes of erosion of property rights, therefore, an economic analysis of the problem of erosion of property rights does not mean a call for a precise definition of all rights to all resources at any cost.
The specification of property rights, from the point of view of economic theory, should go to the limit where further gains from overcoming their vagueness will no longer pay off the associated costs.
The problem of specification of property rights and the influence of transaction costs on this process is considered in the “Property Theorem”.
External effects. Coase theorem
The Coase theorem has many interpretations in modern scientific literature, half of which R. Coase himself would hardly agree with.
First, let's briefly look at the range of problems and concepts that appear in the Coase theorem.
External effects (externalities) are additional costs or benefits that are not reflected in prices.
Positive externalities arise when the activities of some economic entities lead to additional benefits for other entities, and this is not reflected in the prices of the goods produced.
Negative externalities arise when the activities of some economic entities cause additional costs for others.
Traditionally, in neoclassical theory, the problem of externalities was associated with “market failures,” which justified government intervention, and was solved with the help of a “Pigou tax.”
Rice. 2. “Pigou Tax”
"Pigou Tax" must be equal to MEC, then MSB=MSC.
Coase proposed an original hypothesis, following which negative externalities can be internalized through the exchange of property rights to objects that generate externalities, provided that these rights are clearly defined and the costs of exchange are insignificant. And as a result of such an exchange, the market mechanism will lead the parties to an effective agreement, which is characterized by equality of private and social costs.
Difficulties in implementing the provisions of this theorem lie in: 1) a clear definition of property rights; 2) high transaction costs.
The most common is the formulation of the Coase theorem given by George Stigler: “under conditions of perfect competition (with zero transaction costs, since in this case the monopolies will be forced to act as competitive B.V. firms) private and social costs will be equal.”
Coase's formulation is somewhat different: the delimitation of rights (V.V.'s property) is an essential prerequisite for market transactions... the end result (which maximizes the value of production) is independent of the legal decision (V.V. only) under the assumption of zero transaction costs.
Coase emphasized that Stigler did not take into account when formulating the theorem that if private and social costs are equal, the value of production will be maximized. This is obvious if we accept the following interpretation of social costs that Coase gives.
“Social costs represent the highest value that factors of production can produce in their alternative uses.” But any entrepreneur will begin production in the case when his private costs are less than the value of the product produced with the help of attracted factors. Therefore, equality of social and private costs implies maximization of production value.
Sometimes, based on this theorem, it is erroneously concluded that the “Coasian world” is a world with zero transaction costs. In reality this is not the case.
Coase, on the contrary, with his theorem shows the importance of transaction costs for the economic analysis of “actually occurring events.”
“In a world with zero transaction costs, the value of production will be maximized under any liability rules.” In other words, at zero transaction costs, legal rules are irrelevant for maximization.
“With non-zero transaction costs, the law plays a key role in determining how resources are used... Making all or part of the changes (leading to maximizing V.V. production) in contracts turns out to be too expensive. The incentive to take some steps that would maximize production disappears. The law determines what incentives will be lacking because it determines exactly how contracts need to be changed to achieve those actions that maximize the value of production.”
This results in a paradoxical situation: in cases of “market failure,” we de facto recognize the existence of positive transaction costs, otherwise the market would automatically lead to a state of optimality, ensuring the maximization of production value.
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