This literaturehas called into question fundamental concepts like efficiency and the nature ofproduction.

The 'property rights' literature, begins with Coase,and has consistently focused on the role transaction costs play in determiningthe distribution of property rights, broadly defined as all laws, rules, socialcustoms, and organizations that generate incentives for behavior. The ambiguity that surrounds the concept of transaction costs stems, inlarge part, from the existence of two literatures simultaneously claimingownership over the term. Advocates, on the other hand,have hailed the recognition of these costs as revolutionary, and as importantconceptually as 'marginalism' and 'substitution' ( Cheung 1983, p. Do another two words exist in the economic lexicon thatgenerate as much friction? Conceptually introduced in Coase's 1937 paper 'TheNature of the Firm' as simply 'the cost of using the price mechanism' ( Coase p.38, 1988), the words 'transaction costs' have evolved to the point where someskeptics claim they include any cost that is convenient and elusive enough toavoid critical examination ( Niehans 1987, p. Keywords: Transaction Costs, Property Rights, Coase Theorem In articulating these two separatedefinitions, and in demonstrating their relationship and separate uses, it is hopedthat more progress can be made in the field of transaction cost economics.

The 'Neoclassical' definition rests on the costs of trading across amarket, while the 'property rights' definition centers on the costs ofestablishing and enforcing property rights. Few words in the economic language have been more abused or foughtover, and this is shown to result from the emergence of two distinct definitionsand uses. This article addresses the history, use, and significance of the term transactioncosts. Modelling Transaction Costs, Part B: Property Rights Modelling Modelling Transaction Costs, Part A: Neoclassical Modellingħ. The Tale of Two Histories, Part B: The Neoclassical ApproachĤ. A Tale of Two Histories, Part A: The Property Right Approachģ. Department of Economics - Simon Fraser UniversityĢ.

Transaction costs include