The History of Transaction Cost Economics and its Recent Developments
Erasmus Journal for Economics and Philosophy, Vol. 2, No. 1, pp. 29-51, Summer 2009
23 Pages Posted: 22 Oct 2009
Date Written: October 20, 2009
The emergence of transaction cost economics (TCE) in the early 1970s with Oliver Williamson’s successful reconciliation of the socalled neoclassical approach with Herbert Simon’s organizational theory can be considered an important part of the first cognitive turn in economics. The development of TCE until the late 1980s was particularly marked by treating the firm as an avoider of negative frictions, i.e., of transaction costs. However, since the 1990s TCE has been enriched by various approaches stressing the role of the firm in creating positive value, e.g., the literature on modularity. Hence, a second cognitive turn has taken place: the firm is no longer only seen as an avoider of negative costs but also as a creator of positive knowledge.
Keywords: transaction cost economics, Oliver Williamson, theory of the firm, modularity literature, cognitive turn
JEL Classification: B21, B31, D21, D23, D83
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