Transaction costs and collective action
- Variable relationship:
From the neoclassical perspective, the existence of externalities is considered a ‘market failure’ (Bator 1958). Given the Coasean perspective, it is still not a failure of the market; it is a rational result facing high transaction costs (Vatn 2005).
Transaction costs (Transaction Costs) can be defined as the costs of collecting information, and bargaining and monitoring contracts between economic agents (Vatn 2005).
As pointed out by Coase (1960), if transaction costs are zero and rights are defined, optimal allocation can be reached via direct bargains between the involved parties– for example, the polluter(s) and the victim(s).
In the environmental policy field, transaction costs have been associated with the design and implementation of policies. The costs of gathering information, designing the policies, bargaining among stakeholders, and monitoring performance, need to be balanced against the benefits of the policies. By definition, high transaction costs undermine the efficiency of policies; more importantly, high transaction costs can also undermine policy implementation (Collective Action) and effectiveness (Commons Condition Trend) (Vatn 2005).
- Scientific Field
- Component Type(s)
|Transaction costs||Proximate independent variable||Low transaction costs increase the efficiency and thus the likelihood resource management tasks such as collective choice and institutional design, enforcement, and conflict solving.||Low|
|Collective action||Intermediate outcome||Low transaction costs facilitate collective action and, in economic terms, transactions between participants.||High|
|Commons condition trend||Final outcome||Low transaction costs enable the collective action needed to sustain a commons.||Remained the same or improved|
|Conflict resolution and collective action||nested|
|Group size and collective action||nested|
|Collective action and the commons||contains|
Coase, Ronald Harry. 1960. “Problem of Social Cost, the.” JL & Econ. 3: 1.
Vatn, Arild. 2005. Institutions and the Environment. Cheltenham, UK: Edward Elgar Publishing.