"To defend the truth, to articulate it with humility and conviction, and to bear witness to it in life are therefore exacting and indispensable forms of charity."

H. H. Benedict XVI. Caritas in Veritate Encyclical. June 29, 2009

Sunday, March 17, 2013

Transaction cost

1. By implication of the definition of input, any good requires more than one inputs to be produced.

2. Let's group inputs to produce a good g into two groups: on the one hand input i, and on the other hand all the rest of inputs, which we will call (composite) input j. Let's don't call it input i anymore. Since now on, let's call it good i.

3. Transaction cost from good i to good g, or good g's transaction cost from good i, or beginning with good i, is the value of input j.

4. The fact that the term "transaction cost" is mostly used when the value of good i is much dearer than the value of good j doesn't introduce anything analytically relevant to the analysis.

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