Economic science Essay Example | Topics and Well Written Essays - 1000 words

Economic science - Essay ExampleIn order to fully comprehend the phenomena of transaction cost and/or evolutionary economics, it is unconditional that the concept of management accounting be fully understood as well. Management accounting may be defined in various manners. It is fundamentally related to the use of accounting information by managers of organizations. It helps them in making prudent and timely decisions to run their businesses in an efficient and effective manner.Transaction price Economics concerns itself with markets and hierarchies as alternative governance mechanisms for completing a set of transactions. Market forms of governance tend to rely on prices, competition, and contracts to keep all parties to an metamorphose informed of their rights and responsibilities it is based on two assumptions about economic actorseconomic transactions are intendedly rational, however only limitedly so and economic actors seek self-interest with guile. (http//findarticles.com/ p/articles/mi_qa3933/is_199811/ai_n8812605/print)According to Williamson (1996), this type of economics is basically related to the, governance of contractual relations and it consists of tierce levels which can be easily understood by meat of the schematic diagram shown belowThe institutional environment helps us to understand and define that rules of the game. This includes all those factors that may influence or result in a change in the comparative governance costs leading to a reconfiguration of economic organization. Williamson has basically defined governance to be of three types market, hybrid and hierarchy. The individual basically is a, result of the strict assumption of opportunism (i.e., self -interest seeking with guile) and human cognition is subject to bounded rationality (i.e., intendedly rational, but only limitedly so). In addition, TCE views governance as the means, by which to infuse order, thereby to mitigate conflict and realize mutual gains the key dissolve of organization on which transaction cost economics focuses is that of variant, of which two kinds were distinguished autonomous adaptation in response to changes in relative prices, and reconciling adaptation accomplished through administration. Not only do transactions have differing needs for adaptations of these two kinds, but governance structures have differing capacities to supply autonomous and cooperative adaptation. (Williamson 2000, pp. 12, 19-20)New Institutional TheoryOliver Williamson is popularly known as the founder of the New Institutional Theory (also called the Evolutionary Theories of Economics) and he also coined the line institutional economics in 1975. However, its origins can be traced back to the works of Coase (1937), Hayek (1937, 1945), Chandler (1962), Simon (1947), Arrow (1963), Davis and North (1971), Alchian and Demsetz (1972), Macneil (1978), Holmstrm (1979) and others.Various definitions for the new institutional theory can be found in literature . Rosenberg (2000,p. 70) has defined it as, a mechanism blind variation and natural selection that operates everywhere and always throughout the universe.The new institution