Frequency of Transaction Sample Clauses

Frequency of Transaction. When the required level of asset specificity is high, a transaction will be carried internally rather than across markets. Introduction of an internal governance structure requires investment in fixed assets. The extent of capacity utilization by the volume of transaction conducted through a particular governance structure has to be considered. Xxxxx and Xxxxxxxxx (2008) argue that, the costs of specialized governance structure are more easily covered for high frequency transactions. This argument is also supported by Xxxxxxx, Xxxxx, and Row (1993). They point out that, average cost of transactions decreases with the cost of transaction. Therefore frequency of transaction has to be considered in transaction cost analysis.

Frequency of Transaction. In economic theory, volume needs to be considered when doing a transaction. Scatterings of farmers and frequency or volume in transaction have the effect on the total cost incurred by the parties doing transaction. Transaction which involves large volume makes the parties to enjoy economies of scale through low cost of transportation. Network theorist Xxxxxx in 1990, argued that trust, reputation, and mutual dependence dampen opportunistic behavior, and in so doing they make possible more complex inter-firm divisions of labor and interdependence than would be predicted by transaction costs theory (Xxxxxxx, Xxxxxxxx and Xxxxxxxx, 2003).