Transaction Cost Economics: From the Coase Theorem to Empirical Studies

In The Measure o f All Things (2002), K. Alder emphasized the heterogeneity in measurement systems that have prevailed for centuries in economies that otherwise operate under unified political regimes. For example, in France, before the revolution of 1789 and the introduction of the metric system, a ‘pound’ of bread and a ‘pound’ of iron did not weigh the same. Obviously, such situations made trade difficult to organize and opened the door for opportunistic behavior among merchants. In terms of modem economics, it means high transaction costs.