The transaction cost theory of the (multinational) firm

Article Abstract:

Contrary to the assertion of James Love, C. Paul Hallwood does define transaction costs explicitly. Hallwood's ideas can be extended by including the notion that ownership changes could affect transaction costs. Differences in companies' production costs may not be caused by transaction costs. Knowledge owned by a particular company should be classified as a capital asset. There may be such a major difference in assessments of the future that two potential parties to a transaction may decide against that transaction.

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The transaction cost theory of the (multinational) firm

Article Abstract:

C. Paul Hallwood argues that too much stress has been put on intermediate markets in internalization theory, and that final product markets deserve more attention. This argument is correct, but Hallwood may underestimate the problem of transaction costs even in a scenario of dual markets which Hallwood sets out. Hallwood's distinction between measurement costs, which he relates to final product markets, and transaction costs, which he relates to intermediate markets, may also be misleading.

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Competencies as private information: an efficient capital asset pricing theory of the firm

Article Abstract:

Competency-based theory of the firm can be extended so that there is no need to assume potential rent appropriation or competencies that cannot be separated from the firm. Transaction costs are not relevant to the internalization decision in this model. Measurement cost problems may be linked to private information, but this is not always the case. Firms develop different sets of competencies and they may not be motivated to learn about private information developed by an innovator.

Capital assets pricing model, Capital asset pricing model

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