Transaction Costs, Embeddedness and the Ex Ante Distribution of Quasi Rent
Abstract: This work relates the ex ante distribution of quasi-rent to the notion of embeddedness. Since the mid-1970s, the governance perspective has been dedicated to explaining the mechanisms used for the ex post protection of quasi-rent. Aspects related to the ex ante distribution of this value, however, are neglected in the literature. In the following pages, it is argued that the use of an abstract conception of the market from the governance perspective contributes to the adoption of heroic assumptions, and consequently to inattention to the issue of distribution. In particular, the theory assumes that agents are fully capable of determining ex ante what the reward is for their contributions in a cooperative relationship. This paper questions this assumption, as well as the design used by the market governance perspective. More specifically, it posits that the difficulty of obtaining the relevant prices for specification of the quasi-rent increases as specific investments are made. As a result, the incentives offered to agents in a cooperative relationship can differ from their actual contribution to the achievement of a goal. Two main consequences derive from the theoretical redefinition of the interaction space of economic agents: i) enrichment of the idea of “transaction cost”, with the use of the idea of the existence of “costs of using the price mechanism”; and ii) the effective integration of the concept of embeddedness to the perspective of governance.