Abstract
Governments have been very active in engaging and in encouraging the improvements in transaction efficiency, including the provision of legal, social, and economic infrastructure. While this may partly be explained by the public goods nature, the presence of indirect network externalities (or a second-level publicness) due to the economies of specialization may also be important. The improvement in transaction (including communication and transportation) efficiency may generate benefits in excess of the direct private benefits through the promotion of division of labour that leads to more economies of specialization and the availability of more goods in the market. This is shown in the Yang–Ng framework of inframarginal analysis.
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© 2009 Yew-Kwang Ng
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Ng, YK. (2009). Why Should Governments Encourage Improvements on Infrastructure? Indirect Network Externality of Transaction Efficiency. In: Increasing Returns and Economic Efficiency. Palgrave Macmillan, London. https://doi.org/10.1057/9780230236813_8
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DOI: https://doi.org/10.1057/9780230236813_8
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-30023-5
Online ISBN: 978-0-230-23681-3
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