About Paction Process And Paction Cost

Abstract: as a basic economic activity, the complexity of the paction makes people have different understanding, thus forming the diversity of the definition of paction cost.

The divergence of understanding of paction cost makes the two interpretations of "neoclassical economics" and "new institutional economics" when explaining economic phenomena and constructing economic theories.

Key words: paction, paction process, paction cost, trading as one of the oldest concepts in economics, its basic meaning has never surpassed the category of human being's most basic economic activity, but the understanding and understanding of paction cost began in 1932.

People's differences in understanding paction cost make the so-called "neo classical economics" and "new institutional economics" two modes in explaining economic phenomena and constructing economic theories.

Examining people's understanding of paction costs under different backgrounds is conducive to expanding our understanding of paction costs and using paction costs as an analytical tool to better explain economic activities and other human activities.

The process of paction and paction cost is also the process of paction cost, and the formation of paction cost is accompanied by paction behavior.

People have different understanding of the paction process, so the paction process is divided into narrow paction process and generalized paction process.

Generally speaking, the narrow paction process refers to the process of the displacements of the paction object in the paction between the two parties, that is, under certain background or limited conditions, the two parties can pfer the paction object from tangible entity or invisible service to the other party within the agreed time by means of the trading medium with the help of the trading medium in accordance with the agreed rules between the two parties.

The generalized paction process is based on the narrow paction process, and includes the pre preparation process and the supervision process afterwards.

The pre preparation process of a paction refers to the potential trader's determination of the motivation, paction purpose, paction terms and scope of the paction, and describes the attributes, characteristics, weighing and measurement of the exchanged items.

The paction process in a paction, that is, a narrow paction process, can be described as follows: the two sides of the paction seek each other, communicate, exchange and negotiate activities, draw up contracts, register and pfer goods into the register.

Afterwards, we should supervise and control the pactions concluded, or enforce the legislation, and lawsuits against breach of contract.

Specifically, the paction process can be divided into the following stages: (1) the formation process of paction motivation; the paction is the interaction game between two or more individuals, so the motivation of the two parties is very important.

A trader must have a clear understanding of his motives: what he lacks, what he needs, what he has to choose to deal with, what actions he needs to take to achieve the paction purpose, the intensity of his trading motivation, and what kind of paction he adopts (market or economic organization).

The position of traders in the structure of social division of labor determines their knowledge structure, cognitive level and scope of economic activities, which limit the complexity of their trading motives.

(two) the evaluation process of trading environment should include three elements: a definite knowledge structure, a group of people who are determined by their knowledge fragments, a basic right structure and an exchangeable right structure.

To assess the trading environment, we need to look at the following factors: the role and status of the trading participants; the object of the paction, the number of pactions and the frequency of pactions; the rules governing the conduct of pactions; the trading technology; and the location of pactions.

These factors are subject to three dimensions of trading: uncertainty, asset specificity and trading frequency.

In the trading world, there are random changes, the different preferences of traders, the asymmetry of information and the possibility of opportunistic behavior of traders. This uncertainty will inevitably affect the cooperation space between the two sides in the paction process: the choice of paction, the conclusion and modification of paction contract terms, the expected degree of paction realization and the choice of contract mode.

Asset specificity determines the difficulty of traders entering or leaving the paction process.

It also led to the pre reaction of pactions, namely, the establishment of potential traders' trading motives, trading objectives, trading terms and scope; and the description of the attributes, characteristics, weighing and measurement of goods exchanged.

Contract drafting and negotiation.

Afterwards, the paction is monitored and controlled to prevent a trader's opportunistic behavior from breaking the continuity of the execution contract.

The frequency of pactions is the result of repeated results in the game of cooperation or non cooperation among parties.

The more uncertain factors between the parties, the higher the asset specificity, the lower the frequency of pactions; conversely, the higher the frequency of pactions.

The negotiation process between traders (three) is driven by trading motives.

In exchange, traders may examine the trading environment of individuals and assess the necessity of trading to determine further action strategies: whether cooperative game or non cooperative game is necessary, opportunistic behavior is opportunistic, or, under bounded rationality, traders will choose casual or single game behavior or constant repeated game behavior in order to maximize their utility.

In the process of trading game, the best strategy of a party is to make preliminary judgments and rational expectations through the behavior pattern or preference information of the other party, adopt dynamic following strategy according to the behavior of the other party, and constantly adjust their strategy and strategy behavior, so as to get satisfactory result of gambling.

When the information is sufficient, the uncertainty and risk are easier to predict. When the two parties understand the possibility of the paction, the clearer the definition of the property rights is, the greater possibility is through game, negotiation or cooperation.

Cooperative game requires both traders to have sufficient information and communication.

Four, when the cooperation intention between the traders is confirmed, the two parties will enter into a contract.

The two parties further clarify the following situations: inspection of the quality and quantity of goods at a certain price, the solicitor's invitation and consultation, the drafting and modification of the contract, the provisions of the guarantee clause, the registration of the pfer of the goods and the punishment for breach of contract, etc.

Contract behavior is influenced by future expectations on both sides of the trader.

If a party believes that the specificity of his assets is strong, he wishes to sign a long-term contract, while the other side takes into account future risks and uncertainties. He tends to take opportunistic behavior and sign a short-term contract. Therefore, the terms of the contract must fully reflect the trade-off between the interests of both sides, and the content of the contract will be modified several times, which will extend the signing time.

When the contract is executed and supervised, the trader should implement the terms and contents of the contract in order to achieve the pfer of the paction object. Five.

In order to prevent the loss of pactions caused by opportunistic behavior, both sides of the paction need to design a complete set of paction related restraint mechanisms and punishment mechanisms to ensure normal paction and smooth pfer of property rights.

The portrayal of the trading process by sketches initially outlines the general outline of paction costs, but people's divergent understanding of trading behavior and paction process leads to different understanding of paction costs.

Two different understanding of paction costs and different understanding of paction process result in a cognitive divergence in paction cost. These differences are mainly reflected in the literature of neo classical school and new institutional economics school.

The new classical school's cognition of paction cost is based on the narrow paction process. The school believes that paction cost is the cost arising from the exchange process of market economy, that is, the pfer of ownership (dispersed ownership, private property and paction) is caused by the function of market price mechanism. In short, it is the cost of using price mechanism, which includes pportation cost, commission, time spent in negotiation, various taxes including customs duties, or is considered to be closely related to exchange cost, that is, under the established system background, individuals take certain exchange forms to obtain the designated opportunity cost.

Transaction costs also involve paction efficiency, paction volume, arbitrage capacity, balanced mediation, existence and efficiency.

Of course, in some neoclassical literature, paction costs also involve the decision of property rights such as intermediaries and exchange media.

Yu Er Ge.

Niehans made a detailed description of paction costs and pointed out that paction costs, like production costs, are a general term for the cost of heterogeneous inputs, and point out that paction costs occur because traders must find partners to communicate with each other and convey paction information. Contracts signed by both parties must describe, check, weigh and measure the commodities; draft contracts; consult lawyers; pfer ownership and record them; or, if necessary, enforce contracts through litigation to prevent default.

Stavins further points out that in general, paction costs are ubiquitous in the market economy and are generated by the pfer of property rights.

Because the exchange parties seek and carry out each other.

(two) the understanding of the paction cost category in the "new institutional economics" is mainly based on the broad understanding of the paction process. From the perspective of the system, it analyzes the system cost, and emphasizes that the paction cost of the paction is in a certain environment, and the trading environment can be regarded as the institutional factor of the paction cost formation. "1."

Therefore, we can use institutional analysis to analyze paction costs from the perspective of micro system and macro system.

The definition of paction cost is initially considered from the perspective of market exchange and market pricing mechanism.

Kos believes that there are many factors involved in paction costs: in the market mechanism between the allocation of resources, the existence of enterprises because it can reduce the cost of the operation of the market.

These costs include finding the cost of the price, the cost of negotiation, the cost of signing the contract, and the cost of execution of the contract.

Arrow first used the "paction cost" to describe the "cost of running the economic system".

He claims that "market failure" is not absolute; it is best to consider a broader category, the category of paction costs, that paction costs usually impede - in special cases - the formation of the market "; the cost is" the cost of using the economic system ", that is, the paction cost is the operating cost of the economic system.

Williamson extended paction costs to all economic systems.

He believes that paction costs include ex ante paction costs and ex post paction costs.

Ex ante paction costs include drafting, negotiating and maintaining the cost of implementing an agreement.

Ex post paction costs include: (1) when the paction deviates from the required standard, the unsuitable cost; (2) the cost of the two sides' efforts and debates to correct the deviation criteria; (3) the cost associated with the establishment and operation of the management institution; and (4) the mortgage cost of the security guarantee.

Zhang Wuchang, a representative economist, advocates understanding paction costs from the perspective of human system.

In their view, pactions always occur in certain natural environment and social background. They exist between two or more than two individuals. They inevitably contain orders or rules formed in the course of human development in the natural history, which leads to institutional cost.

Zhang Wuchang said: "in the most general sense, paction costs include all those who can not exist in the absence of property rights, no trading, and no economic organization." Robinson

The cost of Crusoe's economy...

Transaction costs can be regarded as a series of institutional costs, including information costs, negotiation costs, the cost of formulating and implementing contracts, defining and controlling the cost of property rights, the cost of supervision and management, and the cost of institutional changes.

In short, including all costs directly occurring in the material production process, paction costs can also be regarded as the cost of "visible hands".

He attributed the causes of paction costs to: (1) people's rational ignorance or lack of information.

(2) maximizing the prevalence of behavior.

Because he believes that people search and negotiate because they do not understand what they buy and consume.

At the same time, the opportunistic behavior taken by people for maximizing their own interests may lead to the high paction cost and the collapse of the economic system.

Norse further pointed out that paction cost is the resource cost of executing the paction function. Wiener distinguishes between economic paction cost and political paction cost, and the political paction cost is the cost of resources spent in carrying out political paction to promote institutional change.

2., from the analysis of the pfer of property rights, it emphasizes that property rights are the core of paction costs. Kos thinks that property rights are the core of paction costs.