Value and Transaction Costs

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Value and Transaction Costs

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Title: Value and Transaction Costs
Building Bridges Between the Economics of Property Rights and Strategic Management
Author: Foss, Kirsten; Foss, Nikolai J.
Abstract: Abstract We forge linkages between the economics of property rights (Coase, Demsetz, Cheung, Barzel) and strategic management. Property rights to resources consist of the rights to consume, obtain income from, and alienate these resources. Transaction costs are the costs of exchanging, protecting and capturing property rights. We clarify the key role of transaction costs with respect to understanding value creation and the limitations and opportunities of strategizing relative to competitive forces. The economics of property rights identifies new sources of value creation (i.e., reducing the dissipation caused by transaction costs), and new types of resources (i.e., capture and protection capabilities), clarifies the role of contracting in the exercise of market power, and suggests that "strategizing" and "economizing" perspectives are related to a larger extent than is normally recognized. Refutable propositions are derived.
URI: http://hdl.handle.net/10398/6868
Date: 2003-10-29

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