TRANSACTION COST ECONOMICS - HOW IT WORKS - WHERE IT IS HEADED

This paper begins with a sketch of the New Institutional Economics, wi th special emphasis on the 'institutional environment' (North and othe rs) and the 'institutions of governance' (Cease and others). Thereafte r the paper mainly emphasizes the applications of transaction cost eco nomics to the study of governance, the object being to effect an econo mizing alignment between transactions, which differ in their attribute s, and governance structures (firms, markers, hybrids, bureaus), which differ in their cost and competence. I raise a series of issues - phe nomena of interest, describing human agents, describing firms, purpose s served, scaling up - to which any would-bet theory of the firm shoul d be expected to speak and indicate how transaction cost economics res ponds to each. I thereafter describe the mechanisms through which tran saction cost economics is implemented and develop some of the core con ceptual supports out of which it works. Applications to public bureaus , strategic management, and intractable transactions are sketched.