Title: Transaction costs in international production and trade, and the demand for government intervention: a survey amongst entrepreneurs in the Netherlands

Authors: Ebel Berghuis; Frank A.G. Den Butter

Addresses: Windesheim University of Applied Sciences, Zwolle – Almere – Lelystad, Netherlands ' Department of Economics, Tinbergen Institute, VU University, Amsterdam, Netherlands

Abstract: Transaction costs play a major role in international trade and the internationalisation of production with fragmented supply chains. This paper relates the theory of transaction costs economics (TCE) and of international supply chain management to practical experiences of entrepreneurs. A survey among companies in the manufacturing industry and services sector in the Netherlands provides insight into the relative importance of various types of transaction costs when organising production internationally. The survey also provides information about which forms of government interventions in order to reduce transaction costs are to be considered useful and appropriate by the respondents. These answers are confronted with arguments from the theory of public sector economics and of economic diplomacy to reduce transaction costs, for instance by internalising externalities, by promoting knowledge spill-overs and by providing infrastructure with the character of a public good.

Keywords: non-tariff barriers; outsourcing; managing transaction costs; survey analysis; commercial policy; economic diplomacy; country branding; global value chains; Netherlands.

DOI: 10.1504/IJDIPE.2019.099138

International Journal of Diplomacy and Economy, 2019 Vol.5 No.1, pp.1 - 26

Received: 07 Mar 2018
Accepted: 30 Jul 2018

Published online: 16 Apr 2019 *

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