Transaction Costs, Agglomeration Economies, and Industrial Location*

Following an outline of the different types of agglomeration economy, consideration is given to transaction costs. Transaction costs may have a definite spatial dimension because institutional, commercial, cultural, and language characteristics are differentiated across the geographic space separating market agents. The concept of transaction space is introduced to represent the spatial differentiation of these characteristics, and this concept is used to cast light on how space can contribute to coordination and agency problems that raise transaction costs. Contractual agreements that are rearranged, so as to span a less heterogeneous transaction space, permit the reduction of transaction costs. Agglomeration can then be interpreted as an alternative to hierarchical structures within firms in economizing on transaction costs. The paper concludes with illustrations of how this framework may help to understand the spatial implications of corporate restructuring and new information technologies. Copyright 2005 Blackwell Publishing Ltd..

Australian economic growth in historical perspective

This article reviews recent contributions to the evidence on, and interpretations of, the long-run growth of the Australian economy. It is noted that several themes currently prominent in growth theory and empirical growth analysis are reflected in the recent literature on the Australian historical experience. * The helpful comments of Peter Kenyon, Richard Pomfret, and three referees are gratefully acknowledged. Choon Wang contributed excellent research assistance