derchao's mundane [2 articles]

Abstract

Transaction costs, one often hears, are the economic equivalent of friction in physical systems'. Like physicists, economists can sometimes neglect friction in formulating theories; but like engineers, they can never neglect friction in studying how the system actually does -- let alone should -- work. Interestingly, however, the present-day economics of organization also ignores friction. That is, almost single-mindedly, the literature analyzes transactions from the point of view of misaligned incentives and (especially) transaction-specific assets. The costs ...

Abstract

Abstract  The Austrian School of economics—the causal-realist, marginalist, subjectivist tradition established by Carl Menger in 1871—has experienced a remarkable renaissance over the last five decades. It is not always clear, however, exactly what distinguishes the Austrian School from other traditions, schools of thought, approaches, or movements within economics and its sister disciplines. This paper argues that Austrian economics, while part of a broader tradition emphasizing the coordination of the market order, is nonetheless a distinct kind of economic analysis, and that its ...