Propriety, Norms, and Traffic Congestion: Episode 3
The Answer Is Transaction Costs
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The Evolution of Propriety
Alfred Marshall, in his Principles of Economics, first published in 1890, actually has an interesting discussion of transactions cost. John R. Commons took the two different worlds that he saw in classical economics and noted they were linked by what he called trans dash action. Before labor can be produced, consumers can consume where commodities can be physically exchanged. The smallest unit of the institutional economist is a unit of activity, the transaction, with its participants.
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