Costs of Business Formalization: Measuring Transaction Costs in Brazil
Revista de Economia Institucional, Vol. 5, No. 9, 2003
20 Pages Posted: 28 Apr 2005
In the presence of positive transaction costs, institutions and the architecture of organizations take on fundamental importance. This paper measures costs of opening firms in the Brazilian garment industry. The measure of costs to start up a new business in the garment industry in Brazil shows a large variation between regions in the same city and between different areas of the country. Nine different procedures were found along with a time span of 64 days and an average cost of 11,3% of the GDP per capita. Also 39% of the firms declared that they operated informally for some time.
Keywords: Entry costs, transaction costs measurement, firm behavior
JEL Classification: D23, L11, L20, L69
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