2 Explain how transaction cost economics may be used to deci

2. Explain how transaction cost economics may be used to decide what activities are done by an organization on its own and what are not?

Solution

transaction cost can be defined as cost associated with exchange of goods or services and incurred in overcoming market imperfections. they may be divided into 3 types, they are:

search and information costs associated for searching, bargaining and negotiation costs to an agreement and contract, policy making and enforcement costs.

these costs will be take as base for the above transactions.