Economists' Flawed Approach Undermines Efficient Market Solutions
In this article, the authors challenge the idea of transaction costs in economics, contrasting Coase’s arguments against Pigou and market-based transaction approaches. They argue that the concept of transaction costs lacks the necessary theoretical foundation and practical usefulness to support market-based analyses. Market-based transaction cost methods heavily rely on this concept, leading to doubts about their efficiency and desirability. The authors suggest that both Pigou's and Coase's approaches, as commonly used by market economists, rely on information that is often unavailable, making their results questionable. The key point is that the concept of transaction costs is inadequate for the specific role assigned to it by market-based analyses, impacting the validity of these economic approaches.