Measurement Cost and the Organization of Markets

  title={Measurement Cost and the Organization of Markets},
  author={Yoram Barzel},
  journal={The Journal of Law and Economics},
  pages={27 - 48}
  • Y. Barzel
  • Published 1 April 1982
  • Economics
  • The Journal of Law and Economics
PEOPLE will exchange only if they perceive what they get to be more valuable than what they give. To form such perceptions, the attributes of the traded items have to be measured. Some measurements are easy to obtain; others pose difficulties. For example, determining the weight of an orange may be a low-cost, accurate operation. Yet what is weighed is seldom what is truly valued. The skin of the orange hides its pulp, making a direct measurement of the desired attributes costly. Thus the taste… 
Transaction Costs: Are They Just Costs?
What are the main effects of the cost of transacting, and what distinguishes them from other costs? In this paper it is argued that when transaction costs are positive, people are able to gain at
Information Acquisition and Refunds for Returns
A product exhibits personal fit uncertainty when its consumers have idiosyncratic and uncertain values for it. Often a consumer can learn her long-run value quickly by obtaining the good for a trial
Transacting in the marketplace can be a very costly activity. Economic growth, in part, depends upon the development of institutions that minimize the cost of exchange (Barzel 1982 and 1989). An
An Objective Measure of Search versus Experience Goods
This paper proposes the use of product price as an empirically pliable measure of the expected benefits to consumers of acquiring information about product and vendor performance prior to purchase.
Measurement, Reduced Transaction Costs, and the Ethics of Efficient Markets for Human, Social, and Natural Capital
Measurement quality is a fundamental factor in determining the cost of transactions within organizations and markets. A huge gulf separates the meaningfulness and precision of business metrics as
Information Acquisition and the Excess Refund Puzzle
A buyer can learn her value for a returnable experience good by trying it out, with the option of returning the good for whatever refund the seller oers. Sellers tend to oer a "no questions
Transaction Costs and the Collection of Information: Presale Measurement on Private Timber Sales
Measurement efforts to reduce the uncertainty concerning the attributes of heterogeneous goods may simply redistribute wealth and result in social waste. Individuals bearing the cost of such
Transactions and Measurement Costs
By assuming a good as a collection of attributes, I develop a simple model of market exchange of one good when there are costs of measuring these attributes. If a negotiated price correlates with
Bargaining Costs, Bargaining Benefits, and Compulsory Nonbargaining Rules
In thin markets, resources are usually allocated by bargaining. In bargaining, potential trading partners have two contradictory incentives. Each wants to know the attributes of the items the other
The Firm as a Means of Concealing Information
The aim of this article is to demonstrate that a firm may owe its continued existence to its attempts to conceal information from its competitors about the unknown characteristics of a certain


Some Fallacies in the Interpretation of Information Costs
  • Y. Barzel
  • Economics
    The Journal of Law and Economics
  • 1977
IN recent years, one of the areas singled out as having the potential for wasteful behavior is that of information. It is claimed that expenditures on certain kinds of information will yield negative
The costliness of measuring the protein content of wheat and the resulting allocation of
    Demsetz, Production, Information Costs, and Economic Organization, 62
    • Am. Econ. Rev
    • 1972
    The costliness of measuring the protein content of wheat and the resulting allocation of This content downloaded from 143
      An earlier analysis of these markets by Acheson and McManus is not unlike the one presented here