Identical products being sold at different prices in different locations is a common phenomenon. Price differences might occur due to various reasons such as shipping costs, trade restrictions and price discrimination. This is modelled in traditional market models by adding a production that transfers the goods from one location to another. However, this approach is not always satisfactory sinc...

An investor with constant relative risk aversion trades a safe and several risky assets with constant investment opportunities. For a small fixed transaction cost, levied on each trade regardless of its size, we explicitly determine the leading-order corrections to the frictionless value function and optimal policy.

Transaction cost theory has often been used to support to support the idea that information and communication technology (ICT) can reduce imperfection in the economic system. Electronic markets and hierarchies have repeatedly been described as solutions to inefficiencies in the organisation of transactions in complex and uncertain settings. Far from criticising this assumption, this paper highl...

Standard models for …nancial markets are based on the simplifying assumption that trading orders can be given and executed in continuous time with no friction. This assumption is clearly a strong idealization of the reality. In particular, securities should not be described by a single price but by a bid and ask curve. As a …rst approximation, one may assume that the bid and ask prices do not d...

A buyer and seller alternate making offers until an offer is accepted or someone terminates negotiations. The seller's valuation is common knowledge, but the buyer's valuation is known only by the buyer. Impatience to reach an agreement comes from two sources: the traders discount future payoffs and there are transaction costs of bargaining. Equilibrium behavior involves either immediate trade,...

We study the general problem of an agent wishing to minimize the risk of a position at a fixed date. The agent trades in a market with a risky asset, with incomplete information, proportional transaction costs, and possibly constraints on strategies. In particular, this framework includes the problems of hedging contingent claims and maximizing utility from wealth. We obtain a minimization prob...

This paper reconsiders the effect of information technology on transaction costs in view of IT externalities and coordination costs. The aim of the paper is to show that IT has ambivalent effects on the overall transaction costs. This analysis is based on the idea that IT externalities have both positive and negative effects on coordination and thus transaction costs. Two different strategies t...

[1] Alternative mechanisms for water transfers will differ in the types of transaction costs incurred as well as their magnitudes and incidence. This article presents a framework for including transaction costs as well as transfer costs in the evaluation of alternative mechanisms. The work on measurement of transaction costs associated with water markets has underestimated these costs by only f...

the aim of this study is to investigate the effects of outside board on rm value in tehran stock exchange (tse) from the perspective of information transaction costs. to do so, a sample of 96 firms listed in tse is selected to be studied during the period of 2003-2012. tobin q ratio is used to measure rm's value and bid-ask spread for information transaction costs. in addition to these v...

This paper provides an integrative analysis of the drivers of vertical scope, and formalizes theory on capability-driven integration, focusing on the following questions: (1) How does the distribution of individual firm capabilities along a value chain affect vertical scope? (2) How do transaction costs interact with capability distributions in vertically linked segments to determine scope at t...