Editing Transaction cost (section)

== Evaluative mechanisms ==
[[Oliver E. Williamson]]'s<ref>{{Cite journal|last=Williamson|first=Oliver E.|date=1979|title=Transaction-Cost Economics: The Governance of Contractual Relations|url=http://dx.doi.org/10.1086/466942|journal=The Journal of Law and Economics|volume=22|issue=2|pages=233–261|doi=10.1086/466942|s2cid=8559551|issn=0022-2186}}</ref>  theory of evaluative mechanisms assess economic entitles based on eight variables: bounded rationality, atmosphere, small numbers, information asymmetric, frequency of exchange, asset specificity, uncertainty, and threat of opportunism.<ref>{{Citation|last=Young|first=Suzanne|title=Transaction Cost Economics|date=2013|url=https://doi.org/10.1007/978-3-642-28036-8_221|encyclopedia=Encyclopedia of Corporate Social Responsibility|pages=2547–2552|editor-last=Idowu|editor-first=Samuel O.|place=Berlin, Heidelberg|publisher=Springer|language=en|doi=10.1007/978-3-642-28036-8_221|isbn=978-3-642-28036-8|access-date=2020-11-01|editor2-last=Capaldi|editor2-first=Nicholas|editor3-last=Zu|editor3-first=Liangrong|editor4-last=Gupta|editor4-first=Ananda Das}}</ref>

* Bounded Rationality: refers to the physical and mental, intellectual, emotional and other restrictions imposed by people participating in the transaction in order to maximize their interests.
* Atmosphere: The reason for increasing the difficulty of the transaction here is mostly because both parties to the transaction remain suspicious of the transaction, and the two sides are hostile to each other. Such a relationship cannot achieve a harmonious atmosphere, let alone a harmonious transaction relationship. This will cause both parties to increase security measures and increase expenditure during the transaction process.
* Small Numbers: Because the number of the two parties is not equal, the number of available transaction objects is reduced, and the market will be dominated by a few people, which leads to higher market expenditures. The main reason here is that some deals are too proprietary.
* Information Asymmetric: The pioneers in the market will control the direction of the market, and will know the information that is more beneficial to their own development earlier, and often these information will make opportunists and uncertain environments finalized, which will form a unique information gap. so as to form a transaction and obtain a profit
* Frequency of exchange: Frequency of exchange refers to buyer activity in the market or the frequency of transactions between the parties occurs. The higher the frequency of transactions, the higher the relative administrative and bargaining costs.
* Asset specificity: Asset specificity consist of site, physical asset, and human asset specificity. The asset specific investment is a specialized investment, which does not have market liquidity. Once the contract is terminated, the asset specific investment cannot to be redeployed. Therefore, a change or termination of this transaction will result in significant loss.<ref>{{Cite journal|last1=Coggan|first1=Anthea|last2=van Grieken|first2=Martijn|last3=Jardi|first3=Xavier|last4=Boullier|first4=Alexis|date=2017|title=Does asset specificity influence transaction costs and adoption? An analysis of sugarcane farmers in the Great Barrier Reef catchments|url=https://www.tandfonline.com/doi/full/10.1080/21606544.2016.1175975|journal=Journal of Environmental Economics and Policy|language=en|volume=6|issue=1|pages=36–50|doi=10.1080/21606544.2016.1175975|s2cid=168172769|issn=2160-6544}}</ref>
* Uncertainty: Uncertainty refers to the risks that may occur in a market exchange. The increase of environmental uncertainty will be accompanied by the increase of transaction cost, such as information acquisition cost, supervision cost and bargaining cost.
* Threat of opportunism: Threat of opportunism is attributed to human nature. Opportunistic behavior of vendors can lead to higher transaction coordination costs or even termination of contracts. A company can use governance mechanism to reducing the threat of opportunism.