Publication

2006 - Division of Research, Harvard Business School, Boston, Massachusetts

Language

English

Word Count

13,000 words, Guess

Page Count

52 pages

Identifiers

Description

The goal in this paper is to explain the location of transactions (and contracts) in a larger system of production. We first characterize the system as a network of tasks and transfers. While transfers between agents are necessary and ubiquitous, the mundane transaction costs of standardizing, counting, valuing and paying for what is transferred make it impossible for all transfers to be transactions. We go on to argue that the modular structure of the network determines its pattern of mundane transaction costs, and thus establishes where cost-effective transactions can be located.

Subjects

Series Statement

  • Working paper / Division of Research, Harvard Business School -- 06-051

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