Fixed Transaction Cost Taxonomy And Related Studies: Based On System Theory

Observing some specific transaction cost such as export product certification and exhibition tickets, we can find that their forms and functions are similar to the fixed cost in production. Thus, we can name them as Fixed Transaction Cost (FTC). FTC is quite popular in the economies, while studies show that none of the current transaction cost taxonomies are suitable for FTC without ignoring its special functional values. That's why the paper forwards a new taxonomy of transaction cost: Transaction Cost (TC) can be divided into Fixed Transaction Cost (FTC) and Variable Transaction Cost (VTC), and the latter includes Sinkable Transaction Cost (STC) and Pure Transaction Cost (PTC). In this system, STC can be transformed to FTC by transaction system arrangements in order to lower the total transaction cost.The definition of FTC is certain number of system fees the transactor pays before launching transactions in order to acquire specific transaction permissions or services. FTC exists in repeated and similar transaction series. FTC is one kind of functional costs, which has 3 characteristics (fixity, sinkability and long term validity) and 4 functions such as optimizing transaction procedures, picking suitable transactors, setting up transaction barriers and signaling transaction information, etc.Based on the system theory and from the viewpoint of FTC, transaction activities can be divided into 3 levels, i.e. transaction cost (micro-view), transaction system (middle-view) and transaction regime (macro-view). The above 3 system levels are related to each other and share a same objective of lowering TTC. It's FTC that ties them together and plays as the key factor to perform the function of lowing TTC.As an application of the above theories, the paper adopts the approaches such as cost-benefit analysis and game theory to build various models to study the choice, setup and optimizing of transaction systems, and forwards operational methods accordingly. Studies show, the choice and setup economic terms are related directly with FTC, and both of 2 kinds of transaction system optimizing methods (system restraint and system motivation) focus on changing the transactors'payoff conditions. In fact, the optimizing procedure is indeed the substitution from VTC to Transaction System Cost (TSC).