Ethics And Trading Costs

This article mainly expounds the question why ethic and morality can be used to and how to be used to save and reduce transaction cost. The whole article can be divided into four parts.The preface discusses the necessity of studying the question. Through analysing the limitations of the formal institutional arrangements to save transaction cost, this article suggests that attention must be paid to the role of the informal institutional arrangements mainly consisting of ethic and morality in saving transaction cost.The first part simply analyses the conception and connotating process of transaction cost. It states that transaction cost develops from the exchange to the transaction,and it draws forth from the transaction and owns a kind of destinate logic. It indicates that a kind of "ethic orientation" in the economics theory has emerged, further more it makes the New Institutional Economics more explanatory to the reality than that of the traditional economics.The second part mainly discusses the question why ethic and morality can play a role in affecting transaction cost. The academic circle [including the New institutional economists and some ethical scholars]pays much more attention to the role of ethic and morality as such informal institutional arrangements in .giving transaction cost,but neglects the question why ethie and morality can play a role.This part endeavours to analyse the intrinsic causality which exists between ethic and transaction cost from two aspects of the theory and reality, and tries to prove it is destinate that ethic and moral affects trans-action cost.The thind part discusses the question how ethic and morality can be used to save transaction cost. As a kind of informal institutional arrangements, due to the intrinsic causality which exists between ethic and transaction cost, then it is destinate that ethic and morality plays a role to save transaction cost. But, what's the mechanism of this kind of role? This part mainly discusses the question from the two aspects of the regularity and morality,and traditional custom , public opinions and individual morality are the concrete mechanism of ethic and morality in saving transaction cost. .Of course, not all ethic and morality can save transaction cost. Therefore, the last part of the article simply analyses the question by using the Confucianism as an example.