--%>

Analyzing regions leading transaction costs

Analyze at least 3 possible regions for the industry which could lead to transaction costs, explaining each in detail.

E

Expert

Verified

There are many areas to determine and influence on the transaction costs. Some of the areas are uncertainty in many levels, organizational capabilities noise regulation and inter organizational exchanges In the inter organizational exchange, the transaction cost plays a vital role. It is used in the firms who horizontally link to cooperate. Always the decisions depend on various aspects of the situation where the position of the transaction cost is getting influenced. If the transaction costs become very high, for the inter organizational exchange another third party would make the resolution. The variations in the transaction costs are done by the empirical analysis. Actually the transaction cost is reduced by the perpendicular integration. Many big firms have capabilities to handle the transaction costs. This way helps them to use the financial assets. Thus the horizontal and vertical integrations influence on the levels of the transaction costs. The investment capacity, facilities given in the airplanes, passenger payments are also possible for the influence. They may follow the rules and regulations of the foreign government.  There is also the possibility of higher risks. If any problem arises in the voluntary cooperation or any merging, there is possibility of increase in the transaction costs. This ultimately results in the increasing transaction costs. The transaction costs have influence on the free market mechanisms. There are many aspects to be considered in the transaction costs and the market mechanisms. The regulatory, judicial, and political mechanisms are possible to failure due to the high transaction costs. Noise is also considered for regulation in determining the transaction costs.  But in case of the larger firms they never consider the costs increase as they are particular about the services and quality given to the customers. Thus the transaction costs have influence on the inter organizational change, higher levels of uncertainty and organizational capabilities.

   Related Questions in Macroeconomics

  • Q : Definition of equilibrium price

    Definition of equilibrium price: It is the price which balances quantity demanded and quantity supplied. The equilibrium price is frequently termed as the "market-clearing" price since both buyers and sellers are p

  • Q : Self consumption-Value of output

    Illustrate whether output generated for self consumption is comprised or not comprised in the value of output? Answer: The output generated for self consumption is

  • Q : Fiscal Monetary changes With the

    With the general equilibrium framework in place, the stage is now set for introducing fiscal and monetary changes and analysing their effects on the general equilibrium. We will first introduce a fiscal change in the form of increase in deficit-financed expenditure, a

  • Q : Is sale of scooter is national income

    Describe whether the sale of old scooter is comprised in national income?

  • Q : Problem on production function Consider

    Consider a model economy with a production function Y = K0.2(EL)0.8, where K is capital stock, L is labor input, and Y is output. The savings rate (s), which is defined as

  • Q : Open-Economy Macroeconomics

    Open-Economy Macroeconomics   Suppose the structure of an economy with a flexible exchange rates is represented by:   C = 200 + 0.85*(Y - T)             &n

  • Q : Principles of macro economics what are

    what are the four supply factors of economic growth

  • Q : Transactions demand for money The basic

    The basic determinant of the transactions demand for money is the

  • Q : Explain about the marginalism theory

    Most economists believe such that people increase an activity when they perceive the expected additional benefits as exceeding the expected extra cost, but decrease their level of an activity whenever they believe the benefits from the last few units of the activity a

  • Q : McConnell Brue Flynn 19e What

    What relationship does the MPC bear to the size of the multiplier