Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/203054
Authors: 
Valentinov, Vladislav
Year of Publication: 
2009
Citation: 
[Journal:] Agricultural and Food Science (AFSci) [ISSN:] 1795-1895 [Volume:] 18 [Issue:] 1 [Publisher:] The Scientific Agricultural Society of Finland [Place:] Jokioinen [Year:] 2009 [Pages:] 3-15
Publisher: 
The Scientific Agricultural Society of Finland, Jokioinen
Abstract: 
In many parts of the world, rural development is supported by third sector organizations, such as nongovernmental organizations, farmer associations, and cooperatives. This essay develops a transaction cost explanation of these organizations role in rural areas. Since the traditional transaction cost theory is concerned with the choice of governance mechanisms within the for-profit sector, this essay adopts an alternative conceptualization of the notion of transaction cost by building on the theory of the division of labor. This theory regards transaction cost as a constraint on the division of labor causing the replacement of exchange with self-sufficiency. The proposed transaction cost explanation of rural third sector organizations consists of two arguments: 1) third sector organizations embody partial reliance on self-sufficiency; and 2) rural areas exhibit rurality-specific transaction cost acting as a constraint on the division of labor and thus creating a niche for third sector organizations. The essay concludes with suggesting a research program on developing an economic theory of the rural third sector.
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Creative Commons License: 
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Document Type: 
Article
Document Version: 
Published Version

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