Costs of Strategic Adjustments to Rapid Changes in Transitioning Political Economies: The Case of Eastern Germany
Author(s)
Reid, Margaret F.
Abstract
This paper proposes the fusing of transaction cost analysis (TCA) with theories of rapid change to provide for a conceptual framework when analyzing processes of adjustment. The argument is advanced here that if TCA is freed from some of its neoclassical constraints, it can be beneficially employed for comparative analyses of transactional regimes occurring in diverse institutional arrangements such as markets, hierarchies or contracts. The paper concludes with illustrations from eastern Germany before and after the revolution. Modern institutional economics should study man as he is, acting within the constraints imposed by real institutions.
