This article investigates how a plastic manufacturing firm handles the challenging task of comparing and choosing among the feasible alternative modes of structuring the flow of repeated transaction with one of its key suppliers. Qualitative interviews are used to explore the perceptions of the management of the firm concerning the advantages and disadvantages associated with each alternative, ...

Electronic commerce business models can add value by elimination of control and risk-bearing borne by channel intermediaries. But such markets may be less robust encouraging risky behavior. We explore a model of transaction risk in the migration from broker-mediated to electronic markets. The research finds that: (1) the risk of falsely accepting ‘bad’ orders is the critical risk measure for op...

We show that the optimal portfolio can be derived explicitly in a large class of models with transitory and persistent transaction costs, multiple signals predicting returns, multiple assets, general correlation structure, time-varying volatility, and general dynamics. Our continuous-time model is shown to be the limit of discrete-time models with endogenous transaction costs due to optimal dea...

The aim of this study is to empirically investigate the effectiveness of Transaction Cost Theory in explaining the entry mode choices between wholly-owned subsidiaries (WOS) and joint venture (JV) of Taiwanese Electronic Components firms in China market from 2003 to 2005 .Through their real business viewpoint of investing in China , this study hopes to examine the explanation of transaction cos...

Analyzing the “institutional structure of production” as proposed by Coase requires a dynamic analysis of the business system. We focus on the evolution of vertical scope, and propose a framework where capability differences interact with changing transaction costs. Such aggregate forces shape the choice context of individual firms. Specifically, disintegration tends to happen when firms differ...

A governance structure is the set of public and private rules that govern the execution of a transaction. Governance structures affect the efficiency of transactions by solving two basic problems of exchange: coordination and safeguarding. Coordination refers to the alignment of the activities of two or more parties involved in the same transaction. Safeguarding refers to protecting against exc...

This paper examines whether parimutuels can hedge risk-averse people against catastrophic losses. Two optimal stake choice models are constructed. In the first model, where stakes of other players are exogenous, the dynamic optimal hedge is obtained. In the second model, the equilibrium of stake is derived by maximizing the representative agent’s expected utility. Given no transaction cost, par...

the purpose of this study is to assess the transaction cost of borrowing from non-governmental investment development funds which are established in less than a decade. transaction costs are considered as significant and limiting factors for micro-borrowers in using formal loans. the required data are provided by the investment developing support’s parent company using the stratified random sam...