Social Asset Specificity and a Positive View of Transaction Cost

By introducing the concept of "social asset specificity," this paper presents an attempt to analyze public institutions and macro-level institutional change. Social asset is defined as the aggregate of all physical asset, human asset, political, social and legal rules, and so on, that are controlled by the whole society. I distinguish two dimensions of social asset specificity, namely VSAS and HSAS, that measure the idiosyncrasy of the social asset's future productive power and current exchange value, respectively. In a neoclassical world, these two dimensions are the same; but for macro-social institutions, they are different. A theoretical framework is then developed to analyze economic reform strategies in transitional economies. In some sense, this approach also represents a positive view of transaction cost that is complementary to the conventional negative view.