The 2009 Nobel Prize in Economics to Oliver E. Williamson: Recognition of the Influence of Transaction Cost Economics on Business Research

This article provides an introduction to the Journal of Retailing Special Issue dedicated to Oliver Williamson and transaction cost economics. The paper briefly outlines transaction cost economics contributions to marketing and related social sciences.     

Globalisation and Policy Effects in Africa

Globalisation or market integration in Sub‐Saharan Africa is closely linked to the structural adjustment programmes. In this paper we focus on their dependence on the politics and institutional characteristics of the countries concerned. In particular, we argue that one important explanation for the dismal performance of many African countries, in spite of all the measures taken towards market liberalisation, is the combination of, first, a magnification of the effects of policy and, second, a lack of willingness or ability on the part of politicians to respect the restrictions imposed on their behaviour and policy choices by the liberalised markets. We look at how the increased exposure to international prices and returns on assets make the economic equilibrium relations – the law of one price and uncovered interest parity – relevant guidelines for economic policy. The argument is illustrated by the case of Zimbabwe, where lack of respect for the restrictions imposed by international markets has led to an economic crisis with negative growth rates and a departure from globalisation.     

On the economics of the longevity risk transfer market

We present a model of a longevity risk transfer market with different market players (primary insurers, reinsurers, and capital market investors) and investigate how market dynamics and the market players' roles evolve with progressing market saturation. We find that reinsurers' appetite for longevity risk is the key driver in the early stage of market development. Since diversification benefits with other businesses decrease with every transaction, the reinsurance market is intrinsically antimonopolistic. With the increasing saturation of the reinsurance sector as a whole, its competitiveness shrinks leading to rising expected risk-adjusted returns for capital market investors. We show that in a saturated market, reinsurers should assume the entire longevity risk from primary insurers, diversify it within their business mix, and subsequently pass on only specific (nondiversifiable) components of the longevity risk to the capital markets. Our findings provide valuable suggestions on how to make the best use of the market's limited risk absorption capacity.