1998 Savings in the Back Office One of the basic insights of Institutional Economics, is that transactions are neither free nor easy. That is to say, it costs time, money, and effort to negotiate and process transactions, and these costs themselves may tip the balance against a deal that, from the intrinsic particulars might seem to be a promising prospect. Just exactly how these costs manifest themselves, and where the margin for trimming expenditures occur, is the subject of Rubin's book. The first lesson is actually just a premise, but in a very real sense it holds the key to the rest of Rubin's discussion.
Transactional relationships are both complex AND counter-intuitive .
There is nothing obvious about how these situations work - which means that neither most participants NOR most observers will actually get the point of how decisions are made or outcomes result. But since many projects need a longer time horizon, those involved with them try to induce continuing commitment through clever contracts. This is where management rationale and legal legerdemain interface. The decisions to make or buy, to finance an expansion or take a buy-out, and to mass market or franchise, are all covered by the same kinds of principles. This entire argument is both elegantly presented and aptly illustrated.