This paper relates economic development to transaction costs. It reveals the triad transaction costs-market failure-economic underdevelopment. Many scholars attribute the problems of development to the failure of markets to perform their role of resource allocation. Some deny market failure and...

Our purpose is to reveal the transaction cost character of the different forms of market failure where transaction costs are defined as the costs of using the market mechanism, what it costs to organize market exchange or overcome the obstacles to an efficient market process. The paper thus...