Transaction Costs, Risk Aversion, and the Choice of Contractual Arrangements

1969 ◽  
Vol 12 (1) ◽  
pp. 23-42 ◽  
Keyword(s):  
Risk Aversion ◽  
Transaction Costs ◽  
Contractual Arrangements

Option pricing by large risk aversion utility¶under transaction costs

2001 ◽  
Vol 24 (2) ◽  
pp. 127-136 ◽  
Author(s):  
B. Bouchard ◽  
Yu. M. Kabanov ◽  
N. Touzi
Keyword(s):  
Risk Aversion ◽  
Option Pricing ◽  
Transaction Costs

The Contractual Nature of the City

2016 ◽  
Vol 3 (1) ◽  
Author(s):  
Qian Lu
Keyword(s):  
Property Rights ◽  
Transaction Costs ◽  
Large Volume ◽  
Real World ◽  
Coercive Power ◽  
Specific Location ◽  
The Real ◽  
Contractual Arrangements ◽  
Tax Sharing ◽  
The City

AbstractUrbanization is a process in which separated and dispersed property rights become concentrated in a specific location. This process involves a large volume of contracts to redefine and rearrange various property rights, producing various and high transaction costs. Efficient urbanization implies the reduction of these costs. This paper studies how efficient urbanization reduces transaction costs in the real world, based on a series of contracts rather than the coercive power. Specifically, this paper shows that Jiaolong Co. built a city by being a central contractor, which acquired planning rights by contract, and signed a series of tax sharing contracts with government, farmers, tenants, and business enterprises. These contractual arrangements greatly reduced the transaction costs and promoted the development.

scholarly journals The role of transaction costs and risk aversion when selecting between one and two regimes for portfolio models

2018 ◽  
Vol 26 (6) ◽  
pp. 516-521 ◽  
Author(s):  
Emmanouil Platanakis ◽  
Athanasios Sakkas ◽  
Charles Sutcliffe
Keyword(s):  
Risk Aversion ◽  
Transaction Costs

Multiple Risky Assets, Transaction Costs, and Return Predictability: Allocation Rules and Implications for U.S. Investors

2010 ◽  
Vol 45 (4) ◽  
pp. 1015-1053 ◽  
Author(s):  
Anthony W. Lynch ◽  
Sinan Tan
Keyword(s):  
Relative Risk ◽  
Risk Aversion ◽  
Transaction Costs ◽  
Decision Problem ◽  
Return Predictability ◽  
Relative Risk Aversion ◽  
Proportional Transaction Costs ◽  
Risky Assets ◽  
Utility Cost ◽  
Predictable Returns

AbstractThis paper numerically solves the decision problem of a multiperiod constant relative risk aversion individual who faces transaction costs and has access to two risky assets, both with predictable returns. With proportional transaction costs and independent and identically distributed returns, we numerically find the rebalancing rule to be a no-trade region for the portfolio weights with rebalancing to the boundary. The shape of the no-trade region depends on the correlation between the two risky assets. With predictable returns, there is instead a no-trade region for each state. We also examine several important economic questions, including the utility cost of not being able to buy on margin or short stock.

scholarly journals Agricultural Contracting and the Scale of Production

2004 ◽  
Vol 33 (2) ◽  
pp. 255-271 ◽  
Author(s):  
Nigel Key
Keyword(s):  
Risk Aversion ◽  
Technological Change ◽  
Transaction Costs ◽  
Capital Markets ◽  
Asset Specificity ◽  
Agricultural Commodities ◽  
National Surveys ◽  
Imperfect Capital Markets

This study presents evidence that contracting is positively associated with the scale of production for six major U.S. agricultural commodities. Specifically, contract producers tend to operate at a larger scale than do independent producers, and the likelihood of an operation contracting increases with its scale. This relationship is strongest in the cattle and hog sectors, where it persists even among large commercial operations. Six theoretical explanations for the observed correlation between scale and contracting are proposed, including imperfect capital markets, contractor transaction costs, input leverage, grower risk aversion, asset specificity, and technological change. Information from five annual national surveys is used to examine the validity of three of the proposed mechanisms.

scholarly journals Transaction Costs and Outsourcing Decisions in Small- and Medium-Sized Family Firms

2011 ◽  
Vol 24 (1) ◽  
pp. 47-61 ◽  
Author(s):  
Esra Memili ◽  
James J. Chrisman ◽  
Jess H. Chua
Keyword(s):  
Risk Aversion ◽  
Transaction Costs ◽  
Family Firms ◽  
Asset Specificity ◽  
Ownership Structures ◽  
Boundaries Of The Firm ◽  
Different Types ◽  
The Way

An important difference between family and nonfamily firms, and among different types of family firms, is in the way they make outsourcing decisions and thereby define the boundaries of the firm. The authors propose that transaction costs arising from human asset specificity, threats of opportunism, and risk aversion will make small- and medium-sized family firms operating with technologies of low to medium complexity less likely to outsource than comparable nonfamily firms. The authors also argue that the limiting influence of transaction costs on the outsourcing decisions of family firms may be mitigated by variations in available suppliers, goals, and ownership structures.

scholarly journals Competitive Trust Contracting And Transaction Cost Economy

2006 ◽  
Vol 2 (3) ◽  
pp. 59-64
Author(s):  
J. D. Thomson
Keyword(s):  
Corporate Governance ◽  
Transaction Costs ◽  
Transaction Cost ◽  
Alternative Form ◽  
High Tech ◽  
Cost Advantage ◽  
Spiral Acquisition ◽  
Contractual Arrangements ◽  
Acquisition Processes

Evolutionary and spiral acquisition are currently trends in use for acquisitions where the outcomes are uncertain. This paper looks beyond these processes to a concept emphasising trust and transparency within a transaction cost paradigm trust contracting. The evidence suggests that in this experimental trust contracting case study, there was a transaction cost advantage to the buyer of 55% over that of existing high tech acquisition processes. Where the end product (good or service) is largely unknown at the time of contract signature, trust contracting provides transparency and contractual safeguards for both contracting parties, and offers an alternative form of corporate governance which makes use of trust to improve buyer-seller relationships and outcomes for both, allocates risk according to the party best placed to carry the risk, speeds completion of contractual arrangements, and reduces transaction costs for both parties.

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