The theory of the firm and the Transaction Costs Economics approach: elements for an institutional criticism

Abstract

The notorious problems faced by the neoclassical theory of the firm, characterized by a static notion of the business behavior, have induced other schools of economic thought to dedicate great effort in providing an alternative theoric body, from which one could emphasize the Transaction Costs Economy (TCE). This paper points out essential elements and advances of the TCE’s theory of the firm, as well as its limitations, keeping a straight dialogue with other approaches of the Institutional Economy in order to verify its capability to become the sound basis of the institutionalist study of the firm behavior.