Page info: *Author:Mathiesen, H.*Document version:2.2. *Copyright 1997-2019, H. Mathiesen.Legal notice.


Exhibition: The production and transaction dynamics of economic performance


Introduction: This exhibition describes production and transaction cost dynamics in economic systems. Any modern production requires specialization in order to be efficient and specialization causes exchange among agents and principals. The transaction technology such as contracts and legal systems is imperfect and therefore any exchange is associated with transaction costs. The better the transaction cost technology the fewer transaction costs and the more it pays to specialize further. However, the more the production is specialized the more goods and services it is necessary to exchange and this causes the transaction costs to rise once again. As a result there are checks and balances that within a given state of production and transaction technology determines the optimal degree of specialization and exchange.


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-Copyright 1997-2019, H. Mathiesen. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission.Legal notice.