...THE BENEFITS OF TRANSACTION COST ECONOMICS: THE BEGINNING OF A NEW DIRECTION Boudreau, Marie-Claude, University of Georgia, Athens, GA, USA, mcboudre@terry.uga.edu Watson, Richard T. University of Georgia, Athens, GA, USA, RWatson@terry.uga.edu Chen, Adela J. W., University of Georgia, Athens, GA, USA, chenjw@uga.edu Greiner, Martina, University of Georgia, Athens, GA, USA, mgreiner@uga.edu Sclavos, Peter, University of Georgia, Athens, GA, USA, psclavos@uga.edu Abstract In this conceptual paper, we argue that the organizational focus on transaction costs needs to be balanced by an attention to transaction benefits, both at the individual and organizational levels. To the transaction characteristics suggested by transaction costs economics, we add four additional ones likely to foster transaction benefits: intensity of knowledge, segmentation of knowledge, dispersion of knowledge, and scarcity of knowledge. The need to maximize transaction benefits while minimizing transaction costs results in the mixing of governance structures, where two (or more) “pure” governance structures are combined. We create a model of the relationships between transaction characteristics, mix of governance structures, transaction costs and benefits, and information systems; from an instantiated version of this general model, we elaborate four propositions. Moreover, with two “real world” examples (Google and JBoss), we illustrate the existence of the proposed transaction characteristics and mixed...
Words: 6341 - Pages: 26
...Title: Low Cost airlines Industry in India An overview of the Indian aircraft industry The Indian economy has grown at an average rate of around 8% in the last decade. The rise in business and leisure travel (both domestic & international) due to this growth, India emerging as a major origin and destination for international travel have all had a significant impact on commercial aviation in India. According to the airports authority of India (AAI), the passenger traffic is expected to grow at over 20% in the next five years. On the supply side, since 2003, when low fare travel in India was ushered in, a number of low cost carriers (LCC) have entered this fast growing market. However, all of the LCC carriers and - with rare exceptions – even the full service carriers (FSC) charging higher fares have been making losses. By and large, operating a commercial airline in India so far has not been a profitable business. In 2007, the industry witnessed a wave of consolidations primarily to stem the tide of red ink. Boom and bust in Indian aviation industry Air India and Indian Airlines retained a monopoly over civil aviation in India till 1992. The deregulation of the Indian economy that started in the mid-1980s, and proceeded more aggressively after the New Economic Policy in 1991, led to calls for opening up of the airline sector. Over the following years, several new airlines including Damania, EastWest, Jet, Sahara, Modiluft and NEPC started operations. However, high...
Words: 1859 - Pages: 8
...Economics Group Assignment With Individual Component Questions A, B & C EC161/EC282 Walter Heering Seminar Group K Louis Quinton Toby Redman Charlie Spall Question 1……………………………………………………………………………….3 Question 2…………………………………………………………………………….12 Question 3…………………………………………………………………………….23 Toby Redman – Student Number: 13820112 Seminar group K EC161/EC282: Economics coursework: Group assignment with individual component – Question A Table of Contents Introduction 4 Price Ceiling 4 Main Body 5 How It Effects Landlords 6 How It Effects Consumers 7 How It Creates A Black Market For The Good 8 Conclusion 10 References 11 Introduction Price Ceiling A price ceiling is a government imposed price control to make sure that a goods can not be sold for more than a certain price, they cap the price at a certain point rather than letting be sold at the equilibrium. When a price ceiling is set there is more demand in the market than the product being supplied. The government has created excess demand by driving down the price of the product. Taylor (2006) claims that in order for a price ceiling to work it must be set below the equilibrium price of a market. If this does not happen then the ceiling would not have an effect on the price of a good because it would still continue to operate at the current price. As shown on the graph above when the price ceiling is put into place the price shifts from P* to P1 this then lowers the quantity available to the...
Words: 7040 - Pages: 29
...Health Economic Costs of Tobacco Smoking in Canada [Name of the Writer] [Name of the Institution] Health Economic Costs of Tobacco Smoking in Canada Introduction This paper is about the use of tobacco in Canada. The paper will also identify the economic and health costs of using tobacco in Canada. There will also be a discussion of tobacco smoking prevention. The paper will follow a proper pattern. There are several concerns about tobacco smoking in Canada. The government is very concern about this issue and working really hard to get rid of this dangerous habit. The Canadian population is addict to this unhealthy habit of tobacco smoking (Albert Health Services, 2012). Discussion Tobacco smoking is really injurious to health. The smoke of tobacco contains several dangerous chemical. These chemicals are injurious to both smokers and nonsmokers. There are more than 7,000 chemicals in the tobacco smoke. Al large amount of them, around 250 chemicals, are very harmful. These harmful chemicals include carbon monoxide, hydrogen cyanide, and ammonia. The habit of tobacco smoking is very dangerous for health. It affects almost every organ and part of the body. The ultimate impact of smoking is the diminishing of overall health (Propel, 2012). Health Consequences of Smoking There are millions of Canadian who smoking has caused lots of problems. It is also the primary cause of cancer. This cancer even leads to death. It cause causes to several parts...
Words: 3675 - Pages: 15
...Critique of “Production, Information Costs, and Economic Organization” by Armen Alchian and Harold Demsetz Theoretical aspect: What main theoretical contributions does the paper make? / What is the theoretical paradigm it seeks to advance? • This article expounds on classical characterizations of the firm as a centralized, authoritarian entity or concept expected to yield productive outcomes often through autocratic means. Contrary to these characterizations, Alchian and Demsetz argue that the concept of the firm is based on a team-based contractual agent requiring cooperative and voluntary inputs from resource owners and employees (or suppliers), all of whom are input owners, in lieu of an authoritarian relationship between superiors and subjects. The article further explains the team process and why it prompts the necessity for the contractual form, the firm. What are the core assumptions behind the authors’ ideas? • Productivity does not automatically create its own reward. This in fact is reversed, according to Alchian and Demsetz. A particular type of reward stimulates a particular productive response (reward creates productivity.) Understanding this, it is essential, then, to appropriately measure both input productivity and rewards. • Productivity levels and rewards are directly related. The firm, as it is a team-based system of economic organization, will operate best or yield its highest level of productivity when the right rewards are in place to...
Words: 440 - Pages: 2
...Documents The Research Paper Factory AdTech Ad Join Search Browse Saved Papers Home Page» Business and Management Containing Human Resource Costs During Economic Challenges In: Business and Management Containing Human Resource Costs During Economic Challenges Abstract Being able to remain or become globally competitive while facing challenges within today's economy is a challenge for all types of companies and organizations. When faced with struggling budgets outsourcing and or downsizing are often seen as the only possible solutions for businesses to stay afloat. Trying to maintain competitiveness while downsizing and or outsourcing brings about additional challenges for human resource management organizations. Containing Human Resource Costs During Economic Challenges The current economy brings challenges to every level of a corporation, including human resource management. Maintaining an effective budget is not always easy and becomes even more difficult with the strains of an economic crisis. While the elimination of unnecessary materials and or processes may help in curtailing costs and spending, it is not always an easy task; and an even more difficult task involves the elimination of actual jobs. As companies are faced with having to cut costs, eliminating jobs is sometimes an unfortunate solution. Human resources management is defined as the process of managing human talent to achieve an organization's objectives...
Words: 531 - Pages: 3
...Advantage Some companies generate far greater profits than others. The pharmaceutical maker ScheringPlough produced an economic profit of more than $10 billion during the period 1984-2002. That is, the accounting profit it generated exceeded its cost of equity capital by that amount. Over the same period, U.S. Steel produced an economic loss of nearly $500 million; its cost of capital exceeded its accounting profit by a wide margin. Such large differences in economic performance are commonplace. Understanding their roots is crucial for strategists. Differences in industry structure shed some light on such differences in performance. To a certain extent, Schering-Plough has generated more economic profit than U.S. Steel because the pharmaceutical industry is structurally more attractive than the steel industry. Rivalry in the pharmaceutical market is muted by factors such as patent protection, product differentiation, and expanding demand; in contrast, rivalry in the steel industry is fierce—fueled by excess capacity, limited differences across products, and slow growth. Many pharmaceutical users hesitate to switch among products or brands, while steel customers are usually willing to switch among producers to get a better price. Many pharmaceuticals are made from commodities with little labor input, while unions exercise such power in the steel industry that labor costs often account for a quarter of total revenue. Such contrasts in industry-level competitive forces are one reason that...
Words: 10603 - Pages: 43
...additional challenges for human resource management organizations. Containing Human Resource Costs During Economic Challenges The current economy brings challenges to every level of a corporation, including human resource management. Maintaining an effective budget is not always easy and becomes even more difficult with the strains of an economic crisis. While the elimination of unnecessary materials and or processes may help in curtailing costs and spending, it is not always an easy task; and an even more difficult task involves the elimination of actual jobs. As companies are faced with having to cut costs, eliminating jobs is sometimes an unfortunate solution. Human resources management is defined as the process of managing human talent to achieve an organization's objectives (Bohlander & Snell, 2010). Being able to effectively execute the process of human resources management relies on several factors. Being able to compete, recruit and staff globally; embrace new technology; manage change; manage talent; respond to the market and contain costs are imperative to a successful human resources management organization In today's challenging economy, containing costs can be a challenge for even the largest of companies and understandably so, can seem impossible for smaller companies. There are several options companies may consider in regards to containing costs. Downsizing and outsourcing are both common options used by companies in an attempt to...
Words: 1923 - Pages: 8
...Erin Goff Managerial Economics BUS 640 Should you Buy or Rent a House? Instructor Bolden 06/04/2012 Abstract One of the biggest decisions people will make is if they should buy or rent a home. There are many advantages and disadvantages in each decision. Explicit costs are easily seen by consumers. Implicit costs and opportunity costs are not always recognized and often looked over when making decisions. I wanted to see the costs in terms of both of these. I am focusing on the costs of each in order to get the total economic cost in the end. The economic cost is able to give me a value for both renting and buying over 30 years. My analysis has led me to the conclusion that buying over the long term is going to be the best choice. When you decide that is it time to move to a new home, is it better to rent or purchase? I will talk about this topic in detail in the following paper. I am currently facing this decision myself, along with many other Americans every day. I am currently renting, with the current economy and low interest rates I am looking at buying a home. I wanted to look at the costs of renting verses buying so that I can see the factors and costs involved in the decision making. Whether to buy or rent is a question that most people face in their life. This is a big decision for many people and involves many factors. It relies on where people are in life and where they want to be, however it also does have economic impacts as well. Being that it is one of the...
Words: 3481 - Pages: 14
...Economic Tradeoffs of Substituting Transportation for Inventory in the Department of Defense - A Case Study of Pipeline ReductionBy H. Don Taylor Thesis submitted to the Faculty of the Virginia Polytechnic Institute and State University in partial fulfillment of the requirements for the degree of MASTER OF ARTS in ECONOMICS APPROVED: _____________________ Dr. Roger Waud _____________________ Dr. Nancy A. Wentzler _____________________ Dr. Brian Reid ____________________ Dr. Tom Lutton 1998 Blacksburg (Northern Virginia Campus), Virginia Keywords: Transportation, Inventory, Tradeoff, Simulation Economic Tradeoffs of Substituting Transportation for Inventory in the Department of Defense: A Case Study of Pipeline Reduction- H. Don Taylor {Abstract} This thesis identifies the potential net economic gains from substituting less costly transit for relatively costly parts inventory through pipeline reduction. The analysis considers long run steady state economic implications of adjusting the current mix of inventory investments and transportation expenses. The scope of the analysis is focused on a case study of Department of Defense (DoD) parts inventories within the US. The inventory scope is limited to high cost low priority, non-mission critical, replenishment parts (engines, electronics, assemblies and components, etc.). The study uses baseline data collected over 9 months from over 200 inventory sites on thousands of parts. Pipeline reductions...
Words: 20942 - Pages: 84
...MANAGEMENT Birch Paper Company Submitted by, Chandra Mouli Kavi Section C Roll no. 2010132 1. What is the immediate economic impact to the company of sourcing the product to either WEST PAPER or EIRE? Mr. William Kenton, manager of the Northern Division, should be permitted to choose the alternative that is in Northern division's own interests. The transfer price policy gives him the right to deal with either insiders or outsiders at his discretion. If he is unable to get a satisfactory price from the inside source, which is Thompson division, he should be free to buy from outside. The three bids from Thompson division, West Paper Company and Eire Paper Company are $480, $430 and $432 respectively. Below mentioned are the costs involved while taking Thompson division, West Paper Company and Eire Paper Company into consideration. a) Costs for Thompson division Linearboard and corrugating medium : $400 x 70% x 60% = $168 Out of Pocket Total Cost : $400x30%=120 : $288 b) Costs for West Papers = $430 c) Costs for Eire Papers Outside Linear (Southern) Printing (Thompson division) Own Supplies Total Cost : $90x60%= $54 : $25 : $312 : $391 Since all the transfer prices in the company are calculated at costs, the Northern Division should accept the bid for Thompson division as it has the lowest costs. Accepting the bid based on lowest costs would also enable Birch Paper Company to earn the highest profits available. 2. What are the possible solutions to the...
Words: 1004 - Pages: 5
...| ASSESSMENT COVER SHEET (NON BARCODED) | Programme of Study: | MBA | Paper Name: | Operations Management | Lecturer: | Dr. Lincoln Wood | Assessment: | Assesment 1 (Group Report) | Paper Code & Stream: Eg 476680/60 | 468911(Mon 6pm) | Word Count: 1529 | Statement of Academic Honesty This assessment has been written by me and represents my own work. This work has not been previously submitted. All sources information has been appropriately acknowledged and referenced. I have maintained and will continue to maintain the confidentiality of any persons/organisations referred to in this assessment. I permit this assessment to be copied for academic processes (such as moderation). I have retained a copy of this assessment electronically. Complete this section for group assessments only. Tanya Chappell – 1313490 Richard Drake – 1272878Saku Abeysuriya – 0437411 Brendon McPhail - 13827929 | LATE ASSESSMENTS You must ensure that this section is completed if the assessment is being submitted after the original assessment deadline. Date handed in? | ........./........./......... | Extension granted? | YES / NO | Operations Management | Assessment 1 – Center...
Words: 2415 - Pages: 10
...ACCOUNTING COSTS, ECONOMIC COSTS AND PROFITS Submitted by COST The total expenditure incurred in the production of a commodity is called cost. It is constituted of explicit and implicit costs. Explicit cost is the actual expenditure incurred on inputs or payment made to outsiders for hiring their factor services. For example, wages paid to the employee, rent paid for hired premises, payment for raw materials etc. Implicit cost is the estimated value of inputs supplied by the supplied by the owner himself. For example, rent on own land, salary for the services of the entrepreneur etc. Implicit cost is calculated as the opportunity cost of the input. Opportunity cost is the cost of the next best alternative forgone. The cost of a specific commodity, is the value of the alternative commodity which is not produced. For example: A farmer can produce either 80 kilograms of rice or 100 kilograms of wheat on his land with the given resources. If he chooses to produce wheat, he will give up 80 kilograms of rice, which is the opportunity cost for wheat. Therefore, cost consists of the actual expenditure on inputs (explicit) and the imputed value of the inputs supplied by the owners (implicit). For example: A farmer cultivates his own land to produce wheat. The explicit cost would include expenditure on seeds, fertilizers, tractors. The implicit cost includes the rent on the piece of self-owned land and payment for his services. ECONOMIC COST AND ACCOUNTING COST Economic cost...
Words: 487 - Pages: 2
...Decision 1. How does Ben’s age affect his decision to get an MBA? Ben must evaluate the cost of completing a MBA program against the higher earning potential after graduating. Therefore Ben’s age is one of the critical factors in his decision because his age determines how much longer he can work. If he would wait his MBA at age 40, he would have less time to recoup his cost by working at an increased salary resulting from graduating his MBA program. 2. What other, perhaps non-quantifiable factors, affect Ben’s decision to get an MBA? Asides from a purely financial standpoint, there are several other factors that may affect Ben’s decision to get an MBA. The value he attaches to education, completing a higher degree, or a sense of accomplishment may positively affect his decision. On the other hand the stress of a MBA program, the time commitment, or the intellectual challenge may be negative factors in Ben’s decision-making process. Ben may also think that a MBA and his increased earning potential may allow him to take better care should he chose to have a family. 3. Assuming all salaries are paid at the end of each year, what is the best option for Ben –from a strictly financial standpoint? In order to compare all three options, the net present value (NPV) of the three options must be calculated. NPV is the present value of future cash flows minus the present value of all costs associated in a decision (Ross, Westerfield, Jaffe, & Jordan, 2011). Option 1 is to stay...
Words: 1612 - Pages: 7
...DELTA HARDWARE STORE DHS-CASE DELTA HARDWARE STORE DHS-PROBLEM • • • • • • Regional Paint Retailer with 3 warehouses Restocks warehouses every month Has one Plant which is insufficient Not cost effective to expand the Plant Consider subcontracting to meet demand Determine a least cost distribution scheme DELTA HARDWARE STORE Mathematical Modeling 1. 2. 3. 4. Identifying decision variables Quantifying objective function Constructing a model shell Data gathering DELTA HARDWARE STORE Identifying decision variables Factors that the decision maker has control over are controllable inputs or decision variables that need to be determined by solving the problem. DELTA HARDWARE STORE Defining Decision Variables Decision Variable is an item under the Decision maker authority to decide numerical value of it DELTA HARDWARE STORE Defining Decision Variables Let Xij = Amount of paint to be shipped this month from i to j Where i indicates the plant or the subcontractor And j indicates one of the warehouses DELTA HARDWARE STORE Objective Objective of all optimization models is to figure out how to do the best with the available resources. Best implies Maximizing (profit) or Minimizing (cost) DELTA HARDWARE STORE Objective Minimize total monthly costs of manufacturing, purchasing, and shipping DELTA HARDWARE STORE Constraints 1 2 Limitations of resources a. Plant Monthly Capacity b. Limit amount order from subcontractor Requirements a. Fulfilled each warehouse...
Words: 858 - Pages: 4
