Transaction costs. Factors influencing transaction costs Factors influencing the level of transaction costs
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 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 for the activities 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 current problems the influence of transaction costs on its activities increases 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 developed US markets and Western Europe creates less effective incentives for the development of transaction cost theory than an unstable state Russian market, the unevenness of the process of its development, the underdevelopment of the institutional environment, the legal field and its mechanisms, 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 options emphases in 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 corresponding 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 practical application 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 in 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 scientific methods into the practice of measuring and analyzing transaction costs in 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;
search information base calculating transaction costs as close as possible to the daily activities of any company, studying its main features that affect 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
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 RF, data Federal service statistics of the Russian Federation and other official government agencies Russia, non-governmental international and Russian organizations, materials of monographs and articles by domestic and foreign economists in periodicals, materials of 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 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. A decisive role in the creation and maintenance necessary conditions exchange relationships are played by the institutional environment 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 accompanying the development of contractual relations in any of existing definitions and classifications, constitute a significant amount both at the macro level and at the level of firm contracts. Their high level- an indicator of the imperfection of the institutional environment of the Russian economy. “State failures” in institutional support economic activity 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, key indicator 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.
Effective method 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 is to identify factors and specific parameters that have the greatest impact on the value of transaction costs in modern economy Russia and the development of 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 development are shown 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. 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 of 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 lesser (indicative) and greater degree of reliability, and differs from existing methods focus on direct calculation of transaction costs at the level of 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.
Conducted quantitative analysis external reporting of real Russian enterprises various forms property, organization and type of economic activity, 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 enterprise 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 further development theory of transaction costs in a transition economy, which is characterized by changes in the basic 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. Feasibility practical use The solutions obtained to the problems of measuring transaction costs were confirmed by 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 reported 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 enterprises of the North Caucasus railway and in the publishing house "Phoenix". 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 when qualitative analysis ratio of growth rates (decline) of shares of transformational (industry, construction, agriculture, transport) and transactional (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 growth specific gravity 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 way to reduce transaction costs is to create an efficient legal regulation 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, must play 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 deepening of 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 absolute value 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 of neo-institutional economic theory, rapidly developing in last 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 evaluation costs useful properties the object of exchange and the costs of ensuring rights and enforcing their observance”37. The need to reduce transaction costs becomes the main reason for the emergence of institutions.
Transaction costs exist not only in a market economy, but also in alternative ways economic organization and, in particular, in a planned economy. 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.
Build social production in an administrative-command economy it 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 is 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 fragility existing system planning; 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 legislative framework regulation of the activities of JSC 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. In such a situation, economic entities are forced to create their own own technologies interactions with counterparties and the state and, accordingly, incur 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 a transition process to the market in modern Russia practically no one questions it. 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 no doubt fair thesis in recent years has been the assertion about the imperfection of legislative and regulatory framework Russian economy. 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, the representatives of the authorities themselves state power 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, it arrived at budget system of these funds so far 68.7 billion rubles, 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 becomes 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 registered in the Russian Federation legal entities 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 when in various ways contracting. 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 terms of monetary equivalent. 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 in late XIX V. 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 from a transaction in different contractual and organizational contexts is largely limited expert assessments their sizes. 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 converting costs into finished products, 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”, organization of sales and supply, etc. in industry, agriculture and other divisions of the “transformation” complex.) The boundary between the two selected sectors is drawn by the authors approximately, and not according to any clear criteria, which they themselves admit. 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 whether or not it is classified as a “transaction sector” in addition to the wholesale and retail, insurance, banking, operations1 with real estate, 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.
Essence and classification of transactions
Lecture 3. Property rights and transaction costs
1. Nature and classification of transactions
2. The essence and classification of transaction costs.
4. The essence and regimes of property rights.
5. Coase theorem and its meaning.
6. Effective distribution of property rights.
Transaction or transaction(English transaction, from Latin transactio - commission, agreement) - a minimal logically meaningful operation that makes sense and can only be completed completely (or completely canceled).
Transaction- conducting a case, conducting, deal, matter, transaction, dispute settlement, dispute resolution by agreement of the parties or compromise, works, protocols.
Transaction(lat. transactio) is an agreement, a transaction. The concept of “transaction” was introduced into economics by John R. Commons.
Oliver Williamson defined a transaction as follows: “A transaction occurs when a good or service moves from the final point of one technological process to the starting point of another, adjacent to the first. One stage of activity ends and another begins" [Williamson, 1996, p. 27]. According to this approach
Transaction– an operation to transfer a product or resource “from hand to hand,” i.e., from one operation (transaction) to another.
These can be "supplies" both within the firm and to the market, and we can talk about both internal and external transactions, or about intra-firm or market transactions. A transaction, therefore, occurs when there is a division of labor [Furubotn, Richter, 2005, p. 55].
Transaction Definition, adopted in the domestic literature, is based on the idea of J. Commons: “Transaction is human activity in the form of alienation and appropriation of property rights and freedoms accepted in society, which are carried out in the process of planning, monitoring the fulfillment of promises, as well as adaptation to unforeseen circumstances” .
Transaction classification:
1) In relation to an institutional object:
· External transactions
· Internal transactions.
For example, an internal or intra-company transaction is described by Adam Smith using the example of the division of labor in the production of pins. “One [worker] pulls the wire, another straightens it, a third cuts it, a fourth sharpens the end, a fifth grinds one end to fit the head; making the head itself requires two or three independent operations" [Smith, 1993].
2) By area of activity:
· Economic
· Social
· Legal
· Political
· Ethical.
Economic transactions– a) the procedure for transferring goods or resources from hand to hand; b) deal.
Social Transactions- social actions that are necessary to create and maintain the institutional framework within which economic activity is carried out.
Legal transactions(John Commons) is “the alienation and appropriation of property rights and freedoms created by society.” This definition of transaction also deals with the transfer of resources, but in a legal sense. It talks about the transfer of property rights and other rights confirmed by law.
Political transactions– actions as procedures for concluding political treaties and agreements.
Ethical Transactions– actions as procedures for executing informal rules. For example, a ritual.
3) By type of operation, John Commons distinguished
· trade transactions,
management transactions
· rationing transactions.
Trade transactions transactions for the transfer of rights to material assets and services through a voluntary agreement between parties equal under the law. Trade transactions create incentives in the market system for the production and supply of material assets.
Management Transactions– operations to coordinate people producing products and services. They imply relationships of power and subordination between legitimate levels of hierarchy (for example, master and worker). For example, an employment transaction gives the employer the right to control the actions of the worker, and the worker the duty to obey. On the other hand, it gives the worker the right to wages And social package, and the employer is obliged to finance wages and benefits package.
Rationing transactions- “negotiations to reach an agreement between several participants who have the right to distribute profits and losses between members of a joint venture”, carry out the distribution of real income (wealth). They also imply asymmetry of relationships and subordination between legal levels of the hierarchy (for example, the formation of dividend policy by the board of directors or the development of the state budget and tax policy by government bodies). Consequently, rationing transactions distribute profits and losses from the creation of wealth as prescribed by the upper levels of government. These strategic transactions form constraints on the potential content of trading and governance transactions.
4) In relation to other transactions:
· Autonomous
· Related (with other transactions)
5) By repeatability:
· One-time
Regular
6) By complexity:
· Simple
· Complex
7) By validity period:
· Short-term
· Long-term.
8) According to the degree of formality:
· Formal
· Informal
9) By character:
· Commodity
· Institutional.
Four levels of transactions according to O. Williamson: one-time (elementary) exchange on an anonymous market; repeated exchange of mass goods (in the absence of asset specificity); a recurring contract related to investments in specific assets; investments in exclusive assets.
2. Essence and classification of transaction costs
Transaction costs- These are the costs that arise when carrying out transactions. They consist of the costs of resources and time spent on completing a transaction, as well as losses arising from the fact that an incomplete or ineffective contract was concluded.
The idea of transaction costs first appears in R. Coase’s article “The Nature of the Firm” in 1937, where he talks about the costs of using the price mechanism, explaining their presence as an alternative mechanism for coordinating activities [Coase, 2007]. Coase did not give a precise definition of the concept of transaction costs and used instead the expression “costs of using the price mechanism.” He developed his idea of transaction costs and its connection with the exchange of property rights in the article “The Problem of Social Costs,” published in 1960, in which he already uses the term “transaction costs” and argues for the need to take them into account in economic theory. Coase identified the following mechanisms for coordinating people's activities:
Firm (organization, hierarchy);
State.
The use of any of these coordination mechanisms is associated with both benefits and costs; none of them is free and does not have an undeniable advantage over other mechanisms.
Transaction costs– costs of coordinating the activities of subjects and resolving conflicts between them.
One of the most famous definitions of transaction costs belongs to Kenneth Arrow, who called transaction costs costs of operating economic systems. He compared this concept to the concept of friction in physics: “Just as friction interferes with the movement of physical objects by dissipating energy in the form of heat, so transaction costs interfere with the movement of resources to those users for whom they are of greatest value.
Institutions arise as a reaction to possible transaction costs in order to ensure their minimization, thereby increasing the benefits of transactions.
The difficulty in studying transaction costs is that many transactions fail due to high costs and therefore do not exist. Therefore, it is difficult to measure transaction costs. On this point, the authors of a study conducted in the UK, which attempted to practically estimate transaction costs in some industries, wrote: “Transaction costs are a funny thing - most of of which does not exist in reality, but<…>in worlds that failed to become reality."
Modern economic theory offers many options for both the definition of transaction costs and their classifications.
Modern neo-institutional theory argues that transaction costs are inherent in all mechanisms of coordination of activities and identifies the following types of transaction costs on this basis [Furubotn, Richter, 2005, p. 58]:
· costs of using a market mechanism for coordinating people's activities - market transaction costs;
internal costs (within a firm, household, government agencies) - managerial or bureaucratic costs, these costs arise when the manager exercises the right to give commands within the organization;
· political transaction costs are the costs of using the state mechanism, i.e. costs associated with creating and maintaining the institutional framework of society (costs of creating laws, maintaining mechanisms for protecting rules established by the state, etc.).
Functionally:
· Information search costs (information search costs and information transfer costs). The first are associated with the search for information about sellers, buyers and current prices, as well as with losses caused by the incompleteness and imperfection of the information found. The second includes the costs of encoding, signaling, decoding and training in using the information system.
· Negotiation and contracting costs. Negotiating, concluding and executing contracts require certain costs, which often increase the price of the product. In addition, this includes losses due to unsuccessfully concluded, poorly executed and unreliably protected agreements.
· Costs of Isolation, arising from the inseparability problem. IN joint activities It is difficult to measure the productivity of each factor of production, and detailed differentiation is impossible when determining fees for certain types of services (for example, transport).
· Measurement costs. This includes the costs of measuring equipment, the measurement process itself, the implementation of measures to protect against measurement errors and, finally, losses from these errors. These costs are reduced by product standardization, company guarantees, trade marks and other measures.
· Costs of specification and protection of property rights.
This category includes the costs of maintaining judicial and government bodies that guard law and order, the cost of resources to restore violated rights, as well as losses from poor specifications and unreliable protection of property rights.
· Costs of opportunistic behavior. The term “opportunistic behavior” was introduced by O. Williamson and means the dishonest behavior of an individual, violating the terms of the transaction and aimed at obtaining unilateral benefits to the detriment of the partner (see section 2.2). These costs relate to post-contract behavior and are especially characteristic of collaboration in a team when the potential capabilities of everyone are completely unknown. Two main forms of post-contract opportunism are common: shirking and extortion. Therefore, the costs of opportunistic behavior consist of the associated losses in efficiency, as well as the costs necessary to limit such behavior.
· Costs of Trust, with the growth of which the establishment of “trust” is both problematic and too expensive.
· Costs of competition, associated with the problem of selfish behavior of agents in a competitive situation (for example, cheating), which often results in benefits for the deceivers and losses for the deceived.
Based on the timing of the contracting process, transaction costs are divided into three categories by D. North and J. Wallis:
· Preliminary(ex ante) refer to the period before the transaction, for example, collecting information about prices, possible alternatives, reliability of the counterparty, etc.
· Current(ex interim - formerly temporary) occur at the time of execution of the transaction and the exchange process, for example, negotiations and conclusion of a contract, receipt of notarized documents, insurance, settlements, etc.
· Accompanying or post-contractual(ex post - subsequent), for example, costs of protecting contracts, monitoring their implementation, quality control, etc. They may be associated with shirking and extortion of the counterparty.
Classification of transaction costs according to D. North and T. Eggertson:
· costs of searching for a price, product, seller, buyer;
· negotiation costs;
· costs of drawing up contracts;
· monitoring costs;
· costs of enforcement;
· costs of protecting property rights.
By validity period we can distinguish:
1) “fixed” transaction costs, i.e. specific investments in creating a series of transactions. Performed once for a certain number of transactions. For example, the costs of establishing and protecting property rights.
2) “variable” transaction costs,” i.e. costs, the value of which depends on the number of transactions or their volume. Performed separately for each transaction.
The most important feature of transaction costs is that they allow for significant economies of scale: as the number of similar transactions increases, the costs per transaction (unit transaction costs) fall.
In general, the total costs of society are equal to the sum of transformation costs, i.e. costs associated with converting inputs into finished products, and transaction costs.
The former are determined by technological, and the latter by institutional (legal) factors. However, both parts of total costs are closely related and, to a certain extent, interchangeable. TAI influence the choice of production method, and changes in technology and the level of transformation costs can affect the number of market transactions and other economic processes.
3. Factors influencing the amount of transaction costs.
Factors influencing the value of transaction costs of negotiations:
· characteristics of goods,
· nature of information,
· certainty of the rights of participants,
number of sides
the nature of the relationship between the parties,
· time characteristics of exchange,
Possibility of control and punishment,
· behavior of the parties.
Economic exchange between people becomes possible only when people have rights to the goods being exchanged, these rights are understood by them and there is agreement between people regarding the assigned rights, and it becomes extremely difficult when property rights are not clearly defined.
Ownership- these are relationships between people that arise as a result of limited resources and relate to their use.
From the point of view of economic theory, ownership is a socially recognized right to perform certain actions.
From a legal point of view ownership- a set of formal rules that represent a bundle of rights: for example, the exclusive right to own, dispose and use something.
From an institutional perspective, property rights are a set of formal and informal rules,
The economic definition of property rights is broader than their legal definition, since it covers not only formal rules, but also a variety of informal social norms, which regulate the rights of individuals to use resources. So, property rights define the norms of people's behavior (formal and informal) in relation to limited goods that people must comply with or bear costs in the form of punishment for non-compliance with these rules.
Property rights, which exist in every economy, determine how one can benefit from one's property and what harm can and cannot be caused to other people in the process of using property. For example, in one state it is allowed to cause damage to a competitor by producing better and cheaper goods, but you cannot shoot a person who has violated the border of your property, even if it is obvious that he is encroaching on your property. Another state may have a different system of property rights: you may have the right to kill a person who trespasses on your property, but you are prohibited from selling goods at prices below established by the state minimum limit.
Property rights are often fragmented or dispersed, and each of the powers included in the bundle of rights can be exchanged. After the exchange takes place, the rights are combined into new bundles and the value of the good changes depending on which rights are included in the new bundle.
Splitting of property rights into individual powers and the possibility of exchanging individual powers: to use; consume; exhaust; destroy; improve; develop; transform; sell; present; bequeath; lay down a resource; rent out
Economists usually use a shorter list, which includes:
The right to use the asset (usus), which determines what uses of the asset are legal;
The right to receive income generated by an asset (usus fructus);
The right to change the form of an asset and its substance (abusus);
The right to transfer an asset to others at a mutually agreed upon price, i.e. the right to alienate an asset.
Owner's powers:
1. Right of possession (ius. possendi), consisting in “physical control over the property and the intention to exercise exclusive control,” including through the owner’s representatives, agents”;
2. Right of use (ius utendi), i.e., personal use of the thing. Ownership is limited to things that can be used exclusively by the owners and can be clearly and unambiguously defined. The exclusive right of use cannot be applied to air, water flowing in rivers, waters of the open sea, etc. In relation to these resources, the concepts of property that are used in civil law do not work.
3. The right of disposal or management (ius abutendi). Deciding how and by whom the thing can be used. The owner has an unlimited right to dispose of his thing (if his actions do not contradict other laws and do not violate the rights of third parties).
4. Right of appropriation or right to income (ius fruendi), that is, for benefits arising from the previous personal use of a thing or from allowing other persons to use it.
5. Right to residual value (right of the sovereign, ius vindicandi)- the right to alienate, consume, squander, change or destroy a thing.
6. Right to safety, guaranteeing immunity from expropriation;
People's “natural” tendency to conceal and distort information leads to transaction costs overloading the economy. And yet, modern markets exist and operate successfully. What allows you to keep “friction” at an acceptable level? We can identify seven main factors that reduce the “interaction costs” of subjects in a developed market economy.
1) Favorable legal environment. This legal structure, which meets the following requirements:
· thoughtfulness (from the point of view of economic incentives created by the legal system);
· simplicity and universality of the rules of the game;
· low level of corruption and bureaucratization;
· the presence of centralized (state) mechanisms for maintaining law and order, including a mechanism for resolving conflicts and enforcing compliance with agreements.
2) Law-abiding nature of economic entities, in particular respect for the property rights of others. This quality makes it possible to reduce not only the costs of control and coercion by the state, but also the risk of opportunistic behavior of counterparties. The latter is extremely important from the point of view of “mutual trust,” which we identify as the next factor.
3) High level of trust in society. Confidence in transaction costs acts as a critical and very effective component in reducing the overall level of “friction.” Unfortunately, trust cannot be artificially reproduced - it is a product of long evolution. However, the state is able to speed up this process, contributing to the formation of a favorable legal framework.
4) Macroeconomic and political stability. These factors reduce the level of uncertainty inherent in the economic system, which makes it easier long-term planning and reduces investment risk.
. The effect of excessive tax pressure gives rise to tax evasion and an increase in associated transaction costs.6) Development information infrastructure economy. This parameter directly affects the costs of searching for information.
7) Effective informal rules, customs and traditions.
Sometimes traditions rooted in society can dramatically reduce the “friction” in the economy. The example of Japan is interesting in this regard. Local businessmen pay great attention to personal relationships between partners. Compromise is always preferred to confrontation. Accordingly, during the negotiation process, the parties usually do not resort to the assistance of lawyers. As a result, the propensity to use judicial mechanisms in Japan is much lower than in other developed countries.
Compliance with the above conditions, unfortunately, is a rare case: they are fulfilled exclusively in countries with developed market economy. Only it is distinguished by a high level of trust, respect for property rights and relatively homogeneous ideas about justice and methods of resolving conflicts. This allows society to reduce the high level of transaction costs and opens the way to various forms of interaction and cooperation. The rest of the world economy does not have such a powerful immunity to “friction,” which inevitably affects the number and capacity of markets.
3.3.6. “FRICTION” IN TRANSITION ECONOMY
The lack of necessary elements that reduce the level of transaction costs is one of the biggest problems in a transition economy. In particular, the rapid restructuring in political sphere inevitably leads 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.
The economy becomes like a man walking in water. The enormous resistance of the environment leads to the fact that it reacts to all stimuli 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 2006, 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, which deprives us of a large number of benefits of civilization.
Why doesn’t a Russian who receives an average salary periodically have breakfast or dinner at the nearest cafe, as the average European often does? The reason must be that there is no market. No one offers such a service at reasonable prices, despite the fact that it may be in demand by the consumer (there is effective demand) and profitable (the benefits of creating a cafe with inexpensive cuisine exceed direct costs). Transaction costs have created a barrier to entry into the industry. After taking their full sizes into account in the price of the dish, it rises to such a level that an ordinary Russian can no longer easily enter a cafe.
And since no firm can overcome this barrier, this market does not exist. Any potential participant 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 agreements on rates);
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 and (or) unstable, which complicates settlements with all counterparties.
The least developed markets are those that depend most heavily on the normal functioning of the transaction mechanism. An interesting example of this kind is the loan capital market in Russia. Underdevelopment of collateral legislation and lack of effective ways bringing unscrupulous borrowers to justice leads 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 faced by: subjects is similar to the problem faced by the elderly insurance market. At high interest rates, the role of borrowers will most likely be those banks that lack liquid assets (adverse selection). 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.
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, what are the prevailing conditions this moment prices. 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 for a long time in close cooperation and become so accustomed to each other that each becomes indispensable and unique for 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 specific 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 commodity to be exchanged 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.
Transactions and transaction costs
Transaction as a basic element of institutional analysis. Types of transactions.
Neoclassical theory viewed the exchange of goods as a movement of their consumer properties, reflected in the price, which is carried out instantly and does not have a spatiotemporal component.
Institutional economics focuses on the value of a good, determined by a set of alienable rights to it. However, rights to a particular good belong to someone. This means that exchange is not just the movement of a resource, but its movement sanctioned by the owner. In this understanding, it appears as a transaction.
The category of “transaction” was introduced into economics by J. Commons, according to whom it represents the alienation and appropriation of property rights and freedoms created by society. By property rights, Commons understood legal control, i.e. legal right subject to retain what he needs. Completion of a transaction thereby means the transfer of legal control over the necessary thing.
Transaction – represents the basic relationship for all economic activity. Without it there could be no production, consumption, investment, etc. In addition, as a process of transfer of rights, it creates the prerequisites for the rational distribution of resources:
· a positive decision will be made by an owner who is rational and free in his choice, provided that the public assessment of the usefulness of the resource is higher than its private assessment,
· during the transfer process, the resource will be transferred in such a way that the difference between these estimates (net benefits of the owner) is maximum. This means that the resource will go where its return will be greatest.
Transactions are carried out in conditions of limited resources and the desire of people to maximize their own benefit. This gives transactions the following characteristics:
· conflict, reflecting a relationship of mutual exclusion regarding the use of a limited resource.
· dependence, reflecting the parties’ mutual understanding of the possibilities of increasing their own well-being through interaction.
· an order reflecting the need for compromise in determining the total gain of the parties and its distribution between them.
In this regard, transactions presuppose the presence of appropriate rules as a means of reconciling the conflicting interests of people and regulating their relationships, allowing for the realization of the potential capabilities of each and thereby increasing the overall welfare.
Subjects can establish rules that ensure either a voluntary and mutually beneficial exchange of rights (market, gift), or forced (physical violence, centralization). In the first case, the transaction reflects the agreement of the parties, each of which expects to receive some increase in value to the value of its existing set of goods. Moreover, this expected increase does not have to be the same in absolute terms and in relative terms (in relation to the value of the existing set of goods). In the second case, the transaction is carried out without the consent of one of the parties, for whom the exchange of rights can bring both benefits (donation) and damage (withdrawal).
It is depending on the nature of the resolution of the conflict over limited resources - mutually beneficial or forced - that Commons distinguishes 3 types of transactions: trade (deals), management, rationing
Trade transactions suggest
· transfer from hand to hand rather than production of wealth.
· symmetry (equality) of legal relations between counterparties. It is not necessary that the parties have equal bargaining power.
· motivating counterparties to improve their well-being
independence (jointness) of the decision made
· redistribution of property rights on a mutually beneficial basis, i.e. alienation of value in exchange for no less
The state here acts as an invisible participant in all trade transactions: it carries out the specification and protection of rights.
Management transactions serve the processes of production and delivery of goods, which are built on relations of power and subordination. This implies:
· increase in wealth as a result of the transaction,
· asymmetry of legal relations: the adoption of a final decision by only one of the parties having a preemptive right to do so. This right has legitimate grounds (it is delegated),
· hierarchy: one of the parties directly expresses its will in the form of a command, which for the other is an unconditional limitation on the set of their permissible actions.
Rationing transactions.They distribute profits and losses from the creation of material assets in a hierarchical system of relations as prescribed by the upper levels of government. Such transactions imply:
· result in the form of endowment of wealth to one or another economic agent
· legal asymmetry of relations and subordination between the levels of the hierarchy, the identification of rationing and rationing parties,
· the right to make decisions is in the hands of a collective management body representing top level authorities. This body unilaterally determines the order of its relationships with lower levels and has the exclusive right to make a final decision.
· the rationing party does not necessarily have to regulate all the actions of the rationed party.
Transaction costs and their types
Within the framework of neoclassical theory, exchange is considered without any costs. The cost category here refers to the costs associated with converting raw materials into a finished product. With the implementation of technology that ensures the transformation of one form into another. The costs associated with the need to organize market transactions, as a consequence of the neoclassical postulate of market perfection, are not taken into account.
Institutional economics views a transaction as a form of relationship that involves costs for its implementation. The value of the resources spent on this is transaction costs. They can be associated with the costs of any resources: monetary, material, psychological, time.
The existence of transaction costs is due to a number of reasons. The main ones are two. Firstly, there is a mismatch economic interests individuals interacting with each other. Secondly, uncertainty due to the incompleteness and distortion of the information received and the impossibility of its accurate interpretation due to limited human cognitive abilities. In other words, transaction costs are the costs of coordinating the behavior of individuals regarding the exchange of property rights in conditions of conflict of their goals and imperfect perception of the situation.
The category of transaction costs occupies a special place in institutional economics. It is by relative differences in the levels and structure of transaction costs that representatives of neo-institutionalism explain all the diversity of forms of economic and social life. Alternative economic institutions are said to have comparative advantage in saving on different categories of transaction costs and their coexistence is connected precisely with this.
The introduction of the concept of transaction costs changes the traditional understanding economic costs and their structures. They consist of two components:
· transformation costs associated with the creation of a resource as a set of useful properties. This also includes the technological costs of exchange associated with the physical provision of bringing the resource to consumption (storage, transportation, packaging, etc.).
· transaction costs associated with the transfer of rights to resources (with a change in their legal form).
Since a transaction is an exchange of bundles of property rights, transaction costs are associated with all activities related to this process. Namely:
· with the search for information on prices and quality, as well as the search for potential buyers and sellers and information about their reputation
· with the assessment of this information and comparison of alternatives
· with trading necessary to identify the true positions of counterparties;
· with transaction processing
· with supervision of contract partners and ensuring conditions for fulfilling the terms of the contract, collecting damages if necessary;
· with the protection of property rights, etc.
Therefore, transaction costs are heterogeneous and have complex structure. The following types (or elements) should be distinguished.
Costs of searching for information. This type of cost consists of spending time and money searching for information, without which it is impossible to make a decision regarding the object and form of exchange. In conditions of uncertainty, the search for the most favorable price and other terms of the contract. This type of cost also includes losses , related to the choice not the most optimal option interactions due to a lack of information or the use of information that distorts the real state of affairs.
Measurement costs. The information received must be measured - brought into a form that allows for the assessment of the transaction object and the adoption of appropriate decisions. Measurements consist of determining the physical parameters of the exchanged rights (color, size, weight, quantity, etc.), its quality characteristics, filling property rights. The costs for these purposes form this type transaction costs. In the act of exchange, only some of the many characteristics of the object of the transaction are taken into account, and the accuracy of their assessment (measurement) can be extremely approximate. This entails losses as a result of inadequate decisions, which also relate to measurement costs. Measurement costs increase with increasing requirements for accuracy and completeness, which are directly related to the value of transactions.
Negotiation costs.
Establishing a relationship involves searching for a specific partner who meets established goals. This is due to negotiations with prospective partners regarding the terms of the exchange and its form, comparison and evaluation of proposals, and selection of the optimal one.
Contact processing costs. They are associated with the process of preparing and concluding agreements with the partner who is preferred. This also includes the costs of developing and creating mechanisms to guarantee the execution of these agreements.
Monitoring costs. They are associated with tracking the progress of the parties in fulfilling the agreements concluded between them.
Costs of contract adaptation. Changes are possible during the implementation of agreements external conditions, which the parties could not foresee, but which affect the effectiveness of the contract and the distribution of associated costs and income of the parties. Such changes require adjustments to agreements, which involve costs. Moreover, since the adjustment requires a certain period, during this period losses arise from the ineffectiveness of existing agreements. All this creates adaptation costs.
Costs of protection from third parties. This refers to persons who are not parties to the contract, but who claim (legally or illegally) to appropriate part of the benefits from its implementation (state, mafia, etc.).
Costs of opportunistic behavior. Opportunistic behavior is behavior that evades the terms of the contract (lying, deceiving, shirking, etc.). Utility-maximizing individuals will evade the terms of the contract to the extent that this does not threaten their economic security. The costs of opportunistic behavior come down to the costs of creating mechanisms that prevent this type of behavior. This also includes losses of resources due to violation of the agreements reached by the parties.
Costs of specification and protection of property rights. The transaction comes down to the alienation of property rights to one degree or another. Therefore, its necessary conditions are the fixation of original rights as a prerequisite for contacts and changed rights as a result of the contract. This presupposes the existence of mechanisms for defining and enforcing property rights. All costs associated with the operation of these mechanisms are included in this category of transaction costs.
It is important to note that under the assumption of market perfection (completeness of information), the activities that generate the above transaction costs would either be unnecessary or cost-free. However, in the real world, information is not free.
Transaction costs can also be classified according to the criterion “stages of the contract process”. In this case, two groups of them are distinguished:
· preliminary (pre-contract) costs, which include the costs of searching for information, including information about potential partner and about the market situation, as well as losses associated with the incompleteness and imperfection of the acquired information; costs of negotiating the terms of exchange, choosing the form of the transaction; costs of measuring the quality of goods and services for which a transaction is made; costs of concluding a contract in the form of legal or illegal execution of the transaction.
· final (post-contact) costs. These include the costs of monitoring and preventing opportunism (the costs of monitoring compliance with the terms of the transaction and evading these conditions);
costs of specification and protection of property rights (costs of maintaining courts and arbitration; costs of time and resources necessary to restore rights violated during the execution of the contract; losses from poor specification of property rights and unreliable protection); costs of defense against claims from third parties.
3. Factors influencing the value of transaction costs
The costs to society of carrying out transactions depend on many factors. Let's consider the most significant of them.
1. Uncertainty. From the standpoint of a specific interaction, one should distinguish between the uncertainty of its external environment(objective) and internal (subjective) uncertainty.
The uncertainty of the external environment is associated with the absence of a clear and cognizable pattern of the future development of events that are important for a given interaction. It is built, therefore, on the basis of incomplete knowledge, which makes its optimality unlikely. This problem deepens as the economic system becomes more complex, its scale and elemental composition grow, the structure of technology production differentiates, etc. etc.
Internal uncertainty reflects the lack of complete clarity among the parties to the interaction regarding the goals of the partners and their future behavior. This may be due to various reasons: a lack of complete clarity on the part of the partner himself; with the individuality of his assessments and reactions to unforeseen events; with opportunistic aspirations.
The higher the uncertainty, the more complex and extensive the information needed to make a decision. The more difficult it is to find a mutually acceptable compromise for the parties due to growing differences in the assessment of the situation. Accordingly, the likelihood of ineffective choice and loss from it increases;
2. Object and structure of the transaction. The most significant characteristic of an object from the point of view of the formation of transaction costs is its specificity. It directly affects the form of the organization. relations . As specificity increases, possible losses from ineffective agreements or their violations increase. This presents more high requirements to information retrieval and evaluation of information, to the clarity of agreements and mechanisms for their provision and adaptation, to process control. Losses from disruptions in the adaptation process are also growing.
The structure of the transaction is characterized by the set and completeness of the transferred bundle of powers. The set of alienable powers affects the search for appropriate partners, the form of agreements, the procedure and costs of their preparation, the transfer procedure, the type of protection mechanisms, losses in the event of an unauthorized violation of rights.
3.Scale of the transaction. The higher they are, the larger the volume of exchanged resources the transaction costs associated with this exchange are distributed over. Therefore, other things being equal, there are fewer of them per unit of resource. In other words, here we are dealing with positive economies of scale for homogeneous transactions.
This does not mean that the dependence of average transaction costs on the scale of transactions has an exponential form. As the scale of exchange grows, the expected losses and the costs of preventing them grow, and the process of preparing and concluding agreements becomes more complicated. So sooner or later positive effect the scale changes to negative. In other words, there is an optimal volume of interactions that ensures, within the existing conditions of exchange, a minimum of transaction costs per unit of the exchanged resource.
Each type and situation of exchange has its own optimum. Deviation from it causes an increase in average transaction costs in the relevant sphere of relations and in the economy as a whole. Therefore, the concentration of transaction functions plays an important role in terms of the magnitude of transaction costs. A significant part of transaction functions allows alternative ways implementation. They can be carried out:
directly by the parties to the interaction themselves,
· structures created for this purpose by the parties themselves
· third parties – firms in transactional industries.
Each method differs in the level of concentration of transaction activity, and, consequently, in the specialization and efficiency of the resources used in it.
Increasing the level of specialization and concentration of transaction activities, reducing the average costs of exchange, generates additional TI due to the development of the relationship of the interacting parties with the transaction sphere. If the savings are offset by these additional costs, specialization of the transaction function becomes unprofitable.
4. Regularity of relationships It manifests itself in the frequency of renewal of exchange relations in the previous form between these agents. These relationships can be:
A. Regular. These include:
· Ongoing relationships. The parties are constantly in the process of interaction.
· Systematically repeated. There is no continuity of contact between the parties. However, this process is characterized by renewability with a certain pattern and periodicity.
B. Irregular or random. These include:
· Sporadic relationships. There is also a certain repetition of contacts here. However, there is no clear pattern of their resumption.
· One-time. These are interactions whose probability of resumption in the future is extremely low (close to 0).
There is an inverse relationship between average transaction costs and the regularity factor (N). This is due to the following factors. Firstly, with increasing regularity, it reduces the loss of “under-depreciated cost” of the structures and exchange mechanisms created by the parties. Secondly, with increasing regularity, the possibility of using more economical specialized mechanisms for organizing exchange increases. Thirdly, it becomes possible to use effective exchange control and protection mechanisms, which in principle are not applicable in random transactions. Fourthly, regularly repeated interactions contribute to the development of positive and negative experiences by the parties. This experience helps to improve the mechanisms for organizing transactions.
5 Institutionalization of exchange
The ability of institutions that regulate exchange to influence the costs of interactions is due to the fact that there are constant components in all types of transaction costs. Once the information is collected, it can be used by any number of potential sellers and buyers. Standardization of contracts makes their execution cheaper. Once established, the rules can be extended almost indefinitely to new masses of transactions.
Historically, examples of institutional responses to measurement costs include, for example, the system of weights and measures. It made different quantities of goods comparable, thereby greatly facilitating exchange and providing enormous savings in measurement costs. A similar function was played by the emergence of money, which made goods that differed qualitatively comparable.
