Transaction cost economics

Abstract

Gregory Dow's assessment of transaction cost economics is both thoughtful and provocative. Although we agree on many matters, these remarks focus on our differences. I begin with a brief sketch of the framework out of which transaction cost economics operates. I then examine the purported bias of transaction cost economics in favor of capital managed as against labor managed firms and my alleged failure to deal with 'downward opportunism'. Dow's claim that transaction cost economics is given to functionalist excesses is considered next. Concluding remarks follow.