The Scientific Poverty of Transaction Cost Theory
The Scientific Poverty of Transaction Cost Theory

Summary/Abstract: In this lecture, an analysis of Transaction Cost Theory is carried out. First, Agency Theory and Transaction Cost Theory are briefly presented as „partial theories” of the New Institutional Economics. This is followed by an examination of the methodological requirements of a theory, particularly of Transaction Cost Theory. Transaction Cost Theory is then subjected to analysis on the basis of real theory, decision theory and cost accounting. This analysis results in the findings that Transaction Cost Theory shows considerable defects in the most important definitions of concepts as well as in its substantiation in terms of real theory, decision theory and cost accounting. These defects are the reasons why scientific poverty is ascribed to Transaction Cost Theory, and why this theory is neither applied in firms to a considerable extent nor does it build a theoretically substantiated bridge across New Institutional Economics and Theory of the Firm.

• Details
• Contents