Terry (or Ken or anyone),
What I'm not understanding is you seem to be identifying all design as a transaction and design and production costs as "transaction costs." My understanding of the phrase is that it represents the cost of participating in a market. How is designing an app or programming the app a transaction any more than making a car is a transaction for car company?
Time spent selecting a vendor is a transaction cost because choosing is a cost of exchange. The time spent exchanging proposals, offers, and counter-offers is a transaction cost. The money the bank charges for paying the vendor is a transaction cost. But I don't understand how coding the app is any more a transaction cost than engines are a transaction cost for the car company (i.e., the total cost of the engines minus the extra costs related to the exchange.)
If I understand correctly (and I'm not claiming any expertise in this area), the traditional parsing of types of costs would make the shopping, bargaining, and contract enforcement part of getting the engines' "transaction costs." Some economists call pretty much any institutional cost a transaction cost but that's not standard, as far as I know.
Based on that looser, non standard definition, I get that you are claiming that all expenses of doing business for the maintenance company other than actually doing the maintenance are transaction costs. Fairly broad, but not unreasonable. What I'm not getting is why you seem to be calling some things transactions even though they don't seem to be part of a market exchange other than being part of something that will later be sold. How are you defining "transaction"?
My confusion on what you are saying is a transaction has left me unable to even start understanding why we should care if something is a transaction cost (as opposed to any other sort of cost.)
Sorry if everybody else is on top of this and I'm the only one lost by this.
As long as I'm busy not following things, you've identified regulatory expenses including a carbon tax as a transaction costs. If a carbon tax recoups part of an externality (the dumping of carbon into the atmosphere), why isn't that a manufacturing cost? If the manufacturing system had been properly designed in the first place, eliminating the waste carbon production, would the extra expense of that have been a transaction cost? Why?
I have no trouble with analyzing costs, I'm just stumped with the "transaction" part. What is the value of identifying something as specifically a -transaction- cost?
Gunnar
----------
Gunnar Swanson Design Office
1901 East 6th Street
Greenville NC 27858
USA
[log in to unmask]
+1 252 258 7006
http://www.gunnarswanson.com
|