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Let us define institutions as sets of rules governing interpersonal relations, noting that we are talking about formal political and organizational practices.

— Thrainn Eggertsson

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Notes from Wikiquote

Part II. Property rights and economic outcomes

More quotes by Thrainn Eggertsson

Without the state, its institutions, and supportive framework of property rights, high transaction costs will paralyze complex production systems, and specific investments involving long-term exchange relationships will not be forthcoming.

North's (1979) theory of the state,... is based on the modern theory of the firm... and emphasizes how transaction costs and agency problems affect political behavior and the structure of property rights.

In general terms, transactions costs are the costs that arise when individuals exchange ownership rights to economic assets and enforce their exclusive rights. A clear definition of transactions costs does not exist, but neither are the costs of production in the neoclassical model well defined.

The concept of state ownership is particularly ambiguous. In a democratic society, state property may have some of the characteristics of common property; for instance, the citizens usually do not have the right to sell their individual titles to public property, whereas under dictatorship, state ownership can approach the system of private property with the economy resembling a huge corporation.

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Attribution

Quote text and notes from Wikiquote: Thrainn Eggertsson (page history), available under CC BY-SA 4.0. Source quality and labels are our own summary of what Wikiquote records.