Exchange, Property Rights and Transaction Cost: An Institutional Analysis
Abstract
The aim of this paper is to try to highlight that no social system is able to function if it is based only on networks of free contracts stipulated between legally equal contractual parties, and in which each party is supposed to be guided exclusively by its own utilitarian ends. In any developed exchange system, non-contractual components are of fundamental importance. A pure exchange system based solely on contractual relations may not work in practice.
However, even if there are non-contractual elements in a contract, these elements do not totally govern transactions. In a modern market economy, the rational calculation of profit and loss is the focus of analysis, but it is possible to criticise the claims of neoclassical economists to conceive rationality as unlimited in its scope. Thus, it is argued that in modern society the analysis of exchange should be conducted through the examination of the symbiotic relationship existing between contractual and non-contractual elements.
References
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[54] Moe T.M. (1990b). The politics of structural choice: toward a theory of public bureaucracy, in O.E. Williamson (eds), Organization theory, Oxford, Oxford University Press, pp. 116-153.
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[56] Morselli A. (2018). From nation-state to world society: an institutional reading of globalisation. Journal of Economic Issues, 52(3), 653-675.
[57] Morselli A. (2021). Rationality, information power and institutional theory. Review of Economics and Institutions, 12(2), 1-26.
[58] Morselli A. (2022). An institutionalist-conventionalist approach to the process of economic change. Economic Thought, 67(4), 411-428.
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[60] North D.C. (1990). Institution, transaction costs, and exchange, in J.E. Alt, K.A. Shepsle, Perspectives on positive political economy, Cambridge, Cambridge University Press, 182-194.
[61] North D.C. (1990b). Institutions, institutional change and economic performance, Cambridge University Press
[62] North D.C. (1993). Institutions and credible commitment. Journal of Institutional and theoretical economics, 149(1), 11-23.
[63] North D.C. (1997). Transaction costs through time, in C. Menard (eds.), Transaction cost economics. Recent developments, Cheltenham, Edward Elgar.
[64] Nye J.V.C. (1997). Thinking about the State: property rights, trade, and chancing contractual arrangements in a world with coercion, in J. Drobak, J.V.C. Nye (eds.), The frontiers of the New Institutional Economics, San Diego, Academic Press, 121-144.
[65] Ostrom E. (1985). A method of institutional analysis, in F.X. Kaufman, G. Majone, V. Ostrom (eds.), Guidance, control and evaluation in the public sector, Berlino-New York, De Gruyter, 459-475.
[66] Parson T. (1937). The structure of social action, New York, McGraw-Hill.
[67] Pejovich S. (1999). The effect of the interaction of formal and informal institutions on social stability and economic development. The Journal of Markets & Morality, 2(2), 164-181.
[68] Poggi G. (1998). Il gioco dei poteri, Bologna, Il Mulino.
[69] Polanyi K. (1944). The great transformation, New York, Rinehart.
[70] Randall A. (1978). Property, institutions, and economic behavior. Journal of Economic Issues, 12(1), 1-21.
[71] Sahlins M. (1972). Stone Age Economics, London, Tavistock.
[72] Schmid A.A. (1987). Property, power and public choice, New York, Praeger.
[73] Schumpeter J.A. (1928). The instability of capitalism. Economic Journal, 38(151), 361-386.
[74] Schumpeter J.A. (1976). Capitalism, socialism and democracy, London, George Allen and Unwin.
[75] Simon H.A. (1951). A formal theory of the employment relationship. Econometrica, 19(3), 293-305.
[76] Stepan A. (1978). The State and society: Peru in comparative perspective. Princeton University Press.
[77] Vannucci A. (2004). Governare l’incertezza. Soveria Mannelli, Rubbettino Editore.
[78] Weber M. (1922). Wirtschaft und gesellschaft, Tubinga, Mohr (trad. it. Economia e società, Milano, Edizioni di Comunità, 1981).
[79] Williams E.E., Findlay M.C. (1986). Risk and the role of failed expectations in an uncertain world. Journal of Post Keynesian Economics, 9(1), 32-47.
[80] Williamson O.E. (1984). Credible commitments: further remarks. American Economic Review, 74(3) 488-490.
[81] Williamson O.E. (1985). The economic institutions of capitalism: firm, markets, relational contracting, London, Macmillan.
[82] Williamson O.E. (1986). Economic organization: firm, market and policy control. Brighton, Wheatsheaf.
[83] Williamson O.E. (1996). Hierarchies, markets and power in the economy, in C. Menard (eds.), Transaction costs economy, Cheltenham, Edward Elgar.
[2] Akerlof G.A. (1970). The market for ‘lemons’: qualitative uncertainty and the market mechanism. Quarterly Journal of Economics, 84(3), 488-500.
[3] Akerlof G.A. (1982). Labor contracts as a partial gift exchange. Quarterly Journal of Economics, 97(4), 543-569.
[4] Alchian A.A., Demsetz H. (1972). Production, information costs, and economic organization. American Economic Review, 62(5), 777-795.
[5] Alchian A.A., Demsetz H. (1973). The property rights paradigm. The Journal of Economic History, 33(1), 16-27.
[6] Alchian A.A. (1989). Property rights, in J. Eatwell, M. Milgate, P. Newman (eds.), The New Palgrave, The invisibile hand, New York, Norton.
[7] Althusser L. (1971). Lenin and philosophy and other essays, London, NLB.
[8] Aoki M. (2000). Institutional evolution as punctuated equilibria, in C. Menard (eds.), Institutions, contracts and organizations: perspectives from new institutional economics, Cheltenham, Edward Elgar, 11-36.
[9] Aoki M. (2001). Toward a comparative institutional analysis, Cambridge Mass., and London, The MIT Press.
[10] Arrow K.J. (1962). Economic welfare and the allocation of resources for invention, in National Bureau of Econoic Research, The rate and direction of inventive activity: economic and social factors, Princeton, Princeton University Press, 609-625.
[11] Arrow K.J., Hahn F.H. (1971). General competitive analysis, Edimburgo, Oliver and Boyd.
[12] Arrow K.J. (1974). The limits of organization, New York, Norton.
[13] Ashby W.R. (1960). Design for brain, New York, Wiley.
[14] Bachrach P., Baratz M.S. (1970). Power and Poverty. Theory and practice, Oxford University Press.
[15] Baily M.N. (1974). Wages and unemployment under uncertain demand. Review of Economic Studies, 41, 37-50.
[16] Barzel Y. (1982). Measurement cost and the organization of markets. Journal of Law and Economics, 25(1), 27-48.
[17] Barzel Y. (1989). Economic analysis of property rights. Cambridge, Cambridge University Press.
[18] Barzel Y. (2000). The State and the diversity of third enforcers, in C. Menard (eds.), Institutions, contracts and organizations, Cheltenam, Edwaed Elgar, 211-232.
[19] Barzel Y. (2002). A theory of the State. Economic right, legal right, and the scope of the State, Cambridge, Cambridge University Press.
[20] Becker G.S., Stigler G.J. (1974). Law enforcement, malfeasance, and compensation of enforces. Journal of Legal Studies, 3(1), 1-18.
[21] Besanko D., Spulber D.F. (1989). Delegated law enforcement and non-cooperative behavior. Journal of Law Economics and Organization, 5(1), 25-52.
[22] Blau P.M. (1964). Exchange and power in social life, New York, Wiley.
[23] Boudon R. (1994). Individualismo metodologico, Enciclopedia delle scienze sociali, Roma, Istituto della Enciclopedia Italiana.
[24] Cheung S.N.S. (1970). The structure of the contract and the theory of non-exclusive resources. Journal of Law and Economics, 13, 49-70.
[25] Coase R.H, (1960). The problem of social cost. Journal of Law and Economics, 3, 1-44.
[26] Coase R.H. (1964). The regulated industries: a discussion. American Economic Review, 54, 194-197.
[27] Coleman J. (1990). Commentary: social institutions and social theory. American Sociological Review, 55(3), 333-339.
[28] Commons J.R. (1950). The economics of collective action, New York, Macmillan.
[29] Crawford S.E.S., Ostrom E. (1995). A grammar of institutions. American Political Science Review, 89(3), 582-600.
[30] Crozier M., Friedberg E. (1977). L’acteur et le systéme, Paris, Editions du Seuil.
[31] Demsetz H. (1967). Towards a theory of property right. American Economic Review, 57(2), 347-359.
[32] Dixit A.k. (1996). The making of economic policy: a transaction-cost perspective, Cambridge, Mit Press.
[33] Downs A. (1957). An economic theory of democracy, New York, Harper and Row.
[34] Dunlop J.T. (1958), Industrial relations system, New York, Holt.
[35] Durkheim E. (1984). The division of labour in society, London, Macmillan.
[36] Eggertsson T. (1990). Economic behavior and institutions, Cambridge, Cambridge University Press.
[37] Elliot J.E. (1980). Marx and Schumpeter on capitalism, creative destruction: a comparative restatement”, Quarterly Journal of Economics, 94(1), 25-68.
[38] Fox A. (1974). Beyond contract: work, power and trust relations, London, Faber and Faber.
[39] Frankel S.H. (1977). Money: two philosophies; the conflict of trust and authority, Oxford, Basil Blackwell.
[40] Furubotn E.G., Richter R. (2000). Institutions and economic theory. The contribution of the New Institutional Economics, The University of Michigan Press, Ann Arbor.
[41] Hirshleifer J. (1970). Investment, interest and capital, New Jersey, Prentice-Hall, Englewood Cliffs.
[42] Hirschman A.O. (1982). Rival interpretations of market society: civilizing, destructive or feeble? Journal of Economic Literature, 20(4), 1463-1484.
[43] Hodgson G.M. (1984). The democratic economy, Harmondsworth, Pelican.
[44] Hodgson G. (1991). Economia e istituzioni, Ancona, Otium.
[45] Klein P.A. (1987). Power and economic performance: the institutionalist view. Journal of Economic Issues, 21(3), 1341-1377.
[46] Levi M. (1988). Of rule and revenue, Berkeley, University of California Press.
[47] Leoni B. (1961). Freedom and the Law, Princeton, D. Van Nostrand Co., Inc.
[48] Luhmann N. (1979). Trust and power, Chichester, Wiley.
[49] Machlup F. (1962). The production of information and knowledge, Princeton NJ, Princeton University Press.
[50] Macpherson C.B. (1962). The political theory of possessive individualism: Hobbes to Locke, Oxford, Oxford University Press.
[51] Marsden D. (1986). The end of economic man? Custom and competition in labour markets, Brighton, Wheatsheaf.
[52] Marx K., Engels F. (1976) Karl Marx and Frederick Engels, Collected Works, vol. III, London, Lawrence and Wishart (trad. it. Opere complete, 1979, Roma, Editori Riuniti).
[53] Moe T.M. (1990a). Political institutions: the neglected side of the story”, Journal of Law, Economics, and Organization, 6, 213-253.
[54] Moe T.M. (1990b). The politics of structural choice: toward a theory of public bureaucracy, in O.E. Williamson (eds), Organization theory, Oxford, Oxford University Press, pp. 116-153.
[55] Mises L. von (1949). Human action: a treatise on economic, London, William Hodge.
[56] Morselli A. (2018). From nation-state to world society: an institutional reading of globalisation. Journal of Economic Issues, 52(3), 653-675.
[57] Morselli A. (2021). Rationality, information power and institutional theory. Review of Economics and Institutions, 12(2), 1-26.
[58] Morselli A. (2022). An institutionalist-conventionalist approach to the process of economic change. Economic Thought, 67(4), 411-428.
[59] Mueller D.C. (1989). Public choice II, Cambridge, Cambridge University Press.
[60] North D.C. (1990). Institution, transaction costs, and exchange, in J.E. Alt, K.A. Shepsle, Perspectives on positive political economy, Cambridge, Cambridge University Press, 182-194.
[61] North D.C. (1990b). Institutions, institutional change and economic performance, Cambridge University Press
[62] North D.C. (1993). Institutions and credible commitment. Journal of Institutional and theoretical economics, 149(1), 11-23.
[63] North D.C. (1997). Transaction costs through time, in C. Menard (eds.), Transaction cost economics. Recent developments, Cheltenham, Edward Elgar.
[64] Nye J.V.C. (1997). Thinking about the State: property rights, trade, and chancing contractual arrangements in a world with coercion, in J. Drobak, J.V.C. Nye (eds.), The frontiers of the New Institutional Economics, San Diego, Academic Press, 121-144.
[65] Ostrom E. (1985). A method of institutional analysis, in F.X. Kaufman, G. Majone, V. Ostrom (eds.), Guidance, control and evaluation in the public sector, Berlino-New York, De Gruyter, 459-475.
[66] Parson T. (1937). The structure of social action, New York, McGraw-Hill.
[67] Pejovich S. (1999). The effect of the interaction of formal and informal institutions on social stability and economic development. The Journal of Markets & Morality, 2(2), 164-181.
[68] Poggi G. (1998). Il gioco dei poteri, Bologna, Il Mulino.
[69] Polanyi K. (1944). The great transformation, New York, Rinehart.
[70] Randall A. (1978). Property, institutions, and economic behavior. Journal of Economic Issues, 12(1), 1-21.
[71] Sahlins M. (1972). Stone Age Economics, London, Tavistock.
[72] Schmid A.A. (1987). Property, power and public choice, New York, Praeger.
[73] Schumpeter J.A. (1928). The instability of capitalism. Economic Journal, 38(151), 361-386.
[74] Schumpeter J.A. (1976). Capitalism, socialism and democracy, London, George Allen and Unwin.
[75] Simon H.A. (1951). A formal theory of the employment relationship. Econometrica, 19(3), 293-305.
[76] Stepan A. (1978). The State and society: Peru in comparative perspective. Princeton University Press.
[77] Vannucci A. (2004). Governare l’incertezza. Soveria Mannelli, Rubbettino Editore.
[78] Weber M. (1922). Wirtschaft und gesellschaft, Tubinga, Mohr (trad. it. Economia e società, Milano, Edizioni di Comunità, 1981).
[79] Williams E.E., Findlay M.C. (1986). Risk and the role of failed expectations in an uncertain world. Journal of Post Keynesian Economics, 9(1), 32-47.
[80] Williamson O.E. (1984). Credible commitments: further remarks. American Economic Review, 74(3) 488-490.
[81] Williamson O.E. (1985). The economic institutions of capitalism: firm, markets, relational contracting, London, Macmillan.
[82] Williamson O.E. (1986). Economic organization: firm, market and policy control. Brighton, Wheatsheaf.
[83] Williamson O.E. (1996). Hierarchies, markets and power in the economy, in C. Menard (eds.), Transaction costs economy, Cheltenham, Edward Elgar.
Published
2025-09-30
How to Cite
MORSELLI, Alessandro.
Exchange, Property Rights and Transaction Cost: An Institutional Analysis.
Theoretical and Practical Research in Economic Fields, [S.l.], v. 16, n. 3, p. 818-829, sep. 2025.
ISSN 2068-7710.
Available at: <https://journals.aserspublishing.eu/tpref/article/view/9121>. Date accessed: 28 oct. 2025.
doi: https://doi.org/10.14505/tpref.v16.3(35).22.
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