Antitrust & Competition Policy Blog

Editor: D. Daniel Sokol
University of Florida
Levin College of Law

Wednesday, October 14, 2020

Transaction Cost Economics in the Digital Economy: A Research Agenda

Transaction Cost Economics in the Digital Economy: A Research Agenda


Frank Nagle

Harvard Business School

Robert Seamans

New York University (NYU) - Leonard N. Stern School of Business

Steven Tadelis

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR)


Transaction Cost Economics (TCE) theory has played an important role in understanding when it is more efficient for a transaction between two parties to occur within the market or within an organization. However, as more transactions occur in a digitally-mediated fashion, open questions remain as to how TCE applies in the digital economy. In this article, we consider how digital transformation helps us probe the boundary conditions of TCE and how, despite all the changes wrought by digital transformation, TCE can still provide a useful lens to help scholars and practitioners understand the organization of economic activity in the market-based economic system. We highlight three characteristics of digitally-mediated transactions: reputation mechanisms, private information, and non-pecuniary transactions and then discuss how these characteristics offer opportunities for future research and lay out a research agenda for this increasingly important area.

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