ABSTRACT
This chapter focuses on the trade association-one of the important economic institutions of capitalism. Oliver Williamson's transaction cost economics has sparked renewed interest in how economic activity is governed in capitalist societies. The transaction cost approach to economic institutions has been presented as a general theory of why, when, and where non-market structures supplement and/or displace the market as the means by which economic activities and interactions are coordinated and governed. The transaction cost approach provides little leverage for explaining the initial emergence of price and production associations. Comparative historical analysis reveals that state policy toward economic governance plays an important role in determining the extent to which price and production associations persist over time, and displace or are displaced by alternative governance forms. Vertical integration, internal labor markets and so on all represent alternatives to the market governance of the transfer of goods and services between suppliers and consumers, managers and workers, and investors and firms.
