THE CONTRIBUTION OF TRANSACTION COST ECONOMICS TO A THEORY OF ECONOMIC TRANSFORMATION

This paper examines the contribution of transaction cost economics to a theory of economic transformation. It is shown that transaction costs are of high relevance in transformation processes and can explain transformation problems. For further development it is necessary to distinguish between transaction costs in different institutional regimes and to show the relevance of different degrees of institutional competition. Finally a model is developed that can describe and explain the outcomes of alternative transformation strategies.