What does transaction cost analysis (TCA) primarily focus on minimizing?

Transaction Cost Analysis (TCA) primarily focuses on minimizing production and governance costs, which are essential elements in the economic theory of the firm. TCA examines the costs associated with making an economic exchange, such as the costs of negotiating, enforcing contracts, and regulating production processes.

By analyzing these costs, businesses can determine the most efficient way to organize their operations and transactions, whether through market transactions, vertical integration, or other organizational forms. The goal is to reduce inefficiencies in the process of conducting business and to find the most cost-effective methods for managing resources and relationships.

In this context, minimizing production and governance costs helps organizations streamline their operations, reduce overhead, and enhance competitive advantage. Understanding these costs allows companies to make informed decisions about their strategies and structures.