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Transaction Costs and Policy Analysis

A special issue of Sustainability (ISSN 2071-1050). This special issue belongs to the section "Sustainable Urban and Rural Development".

Deadline for manuscript submissions: closed (26 March 2023) | Viewed by 5595

Special Issue Editor


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Guest Editor
School of Geography and Planning, Cardiff University, Cardiff CF10 3WA, UK
Interests: spatial planning; policy analysis; land policy; environmental economics; transaction costs
Special Issues, Collections and Topics in MDPI journals

Special Issue Information

Dear Colleagues,

“Transaction costs”, as a well-established concept in New Institutional Economics, has been used to explain and analyse the costs of running economic systems, since Nobel Laureate Ronald Coase's seminal article, The Nature of the Firm. Transaction costs are often hidden and include, for example, the costs of collecting information, negotiating, contracting, or making payments. Although there are many studies that have explored such costs in the context of firms and businesses, there are still rather limited studies that investigate the effects of high transaction costs on designing and implementing public policy instruments, particularly land, planning, and environmental policy instruments. Taking account of transaction costs is particularly important in the context of public policies, because high levels of transaction costs can result in reduced degrees of policy effectiveness, efficiency, and equity. High levels of such costs can hinder people from participating in a policy instrument whilst lowering policy efficiency. Additionally, given transaction costs are often unevenly distributed among the parties involved, their magnitude and distribution have considerable influence on the equity of the policy. Therefore, such transaction costs have considerable implications for policy design and implementation, including the policies focused on sustainability agenda.

This Special Issue of Sustainability welcomes theoretical and empirical contributions that aim at providing deeper insights into the effects of transaction costs on the process of designing and implementing land, planning, and environmental policy instruments. Of particular interest are studies that analyse the size, timing, and distribution of transaction costs, and their impacts on the effectiveness, efficiency, and equity of policy instruments. Empirical analyses of the policies focused on sustainability agenda are especially welcome. The geographical scope of the Special Issue is global, and contributions regarding case studies and policy instruments from both developed and developing countries will be equally relevant and welcome.

Dr. Sina Shahab
Guest Editor

Manuscript Submission Information

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Keywords

  • transaction costs
  • New Institutional Economics
  • policy analysis
  • policy instruments
  • institutional analysis
  • land policy
  • planning policy
  • environmental policy

Published Papers (3 papers)

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Research

18 pages, 698 KiB  
Article
Transaction Costs in Agri-Environment-Climate Measures: A Review of the Literature
by Salomon Espinosa Diaz, Francesco Riccioli, Francesco Di Iacovo and Roberta Moruzzo
Sustainability 2023, 15(9), 7454; https://doi.org/10.3390/su15097454 - 1 May 2023
Cited by 1 | Viewed by 1540
Abstract
Agri-environment-climate measures (AECMs) represent a transaction of ecological capital between the government as the buyer of the agri-environmental goods and services produced in the farmland and the farmer as the seller. As such, they involve transaction costs (TC) that serve to safeguard the [...] Read more.
Agri-environment-climate measures (AECMs) represent a transaction of ecological capital between the government as the buyer of the agri-environmental goods and services produced in the farmland and the farmer as the seller. As such, they involve transaction costs (TC) that serve to safeguard the transaction from opportunistic behavior, problems related measurement, and other risks that can occur in the contractual relationship. These costs are an important factor in the design and implementation of any policy. However, analyzing TC is not easy. Several definitions have been proposed, and different strategies have been used to measure these costs. Despite a growing interest in this topic, research addressing the analysis of TC in AECMs has been rather scarce and lacking a systematic approach to make the different studies comparable and their results generalizable. This review article aims to provide a detailed overview of the current state of research related to the analysis of TC in AECMs by exploring the differences in methodological approaches, objectives, and scope among the most relevant studies available and by summarizing their most significant findings. It was observed that there are differences across the studies linked to their objectives in terms of the geographical context in which they are implemented, the actors involved in the program, and the objectives aimed toward in their analysis. However, the sharpest difference observed across these studies is linked to their methodological approach, which in most cases is focused on quantitative analysis. Most of these studies observed a significant variation in the magnitude and determinants of TC across different AECMs, which often depended on the characteristics of the schemes and the institutional environment in which they were implemented, as well as factors linked to specific characteristics of the farmer and/or their farming business. Full article
(This article belongs to the Special Issue Transaction Costs and Policy Analysis)
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18 pages, 309 KiB  
Article
The Transaction Costs of Sustainability: Coase’s Proviso and the Roles of Environmentalists and the Government
by Aleksandar D. Slaev
Sustainability 2023, 15(4), 3096; https://doi.org/10.3390/su15043096 - 8 Feb 2023
Viewed by 1347
Abstract
Environmentalists believe that the Coasean approach is economically efficient but environmentally unsustainable. While acknowledging that this approach is not always sustainable, this paper emphasises its important advantage—the presence of a criterion determining when an activity will/will not lead to an efficient/sustainable outcome. Coase [...] Read more.
Environmentalists believe that the Coasean approach is economically efficient but environmentally unsustainable. While acknowledging that this approach is not always sustainable, this paper emphasises its important advantage—the presence of a criterion determining when an activity will/will not lead to an efficient/sustainable outcome. Coase formulated this criterion on what is termed in this paper “Coase’s proviso”—the balance between the net benefits of an institutional change (rearrangement of entitlements) and transaction costs associated with this change. The article also defines the terms “best use”, “second (or next) best use” and “best user”. On this basis, the paper restates Coase’s proviso and argues that there is no inherent contradiction between economic efficiency and environmental sustainability. According to the restated proviso, when the transaction costs associated with the institutional transformation establishing the best use of a resource are lower than the net benefits of this transformation, the result will be economically efficient and environmentally sustainable. However, if the transaction costs outweigh the net benefits of the best use, a second (or next) best use may be established, which will still be economically efficient, but most likely environmentally unsustainable. The paper explores a case study to check the relevance of the restated proviso. Full article
(This article belongs to the Special Issue Transaction Costs and Policy Analysis)
15 pages, 270 KiB  
Article
Self-Build and Custom Housebuilding Registers in England: A Transaction-Cost and Effectiveness Analysis
by Grace Sadler and Sina Shahab
Sustainability 2021, 13(9), 4912; https://doi.org/10.3390/su13094912 - 27 Apr 2021
Cited by 7 | Viewed by 1787
Abstract
The development of the self and custom housebuilding sector can work towards increasing the supply of housing and alleviate some of the strain on the housing market in England. Although it is not a solution for everyone, improving self and custom housebuilding can [...] Read more.
The development of the self and custom housebuilding sector can work towards increasing the supply of housing and alleviate some of the strain on the housing market in England. Although it is not a solution for everyone, improving self and custom housebuilding can add diversity to the market, increase housing affordability, and produce sustainable homes. This has been recognised by the UK Government, which has introduced legislation which aims to assist self and custom builders on the journey to building their own home. The goals of the legislation are to ensure every local authority in England keeps a register of individuals who want to build their own home, to consider this register when carrying out other planning functions, and to grant sufficient planning permissions for those on the register. This paper evaluates the ‘self-build and custom housebuilding registers’ from the perspective of transaction costs and perceived effectiveness. This is achieved through semi-structured interviews with local authority planners, private-sector planners, property developers, and national bodies. The findings of this study identify that the primary transaction costs occur in the eligibility tests stage of the register application and relate to the uncertainty felt by applicants post application. The paper concludes that these could be rectified by implementing a more consistent and fair system. The perceived effectiveness of the register varies considerably. The paper determines that the policy requires significant change in order to meet the goals it set out to achieve, which includes model Supplementary Planning Guidance documents and a robust support system for applicants. Full article
(This article belongs to the Special Issue Transaction Costs and Policy Analysis)
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