Private Governance

Part of the The European Heritage in Economics and the Social Sciences book series (EHES, volume 8)


Economic development is impossible to achieve without exchange and investment. To enable both, a market-based economy needs two distinct sets of institutions: those that encourage trust and commitment in economic relations, and those that define and secure property rights. In the previous chapter, the implications of high transaction costs for the level and organisation of economic activity in low-income countries have been discussed. A specific source of transaction costs, which arises if the institutional environment is characterised by weekly performing formal institutions, is the cost of protection against opportunistic behaviour in exchange relations, and the cost to protect ones property against theft and expropriation.


Moral Norm Opportunistic Behaviour Exchange Partner Contract Enforcement Dishonest Behaviour 
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Copyright information

© Springer Science+Business Media, LLC 2011

Authors and Affiliations

  1. 1.CologneGermany

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