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In modern economies a substantial proportion of resources is increasingly allocated to transaction costs. An improvement in the definition of transaction costs to include both the information role and efficiency role requires an integration of the approaches of positive economics and normative economics. There are few areas with as much potential for enriching economic science as the theme of transaction cost analysis (TCA) and this book seeks to investigate this potential, building on the recognized TCA analyses of significant contributions ranging from Ronald Coase to Oliver Williamson. In The Economics of Transaction Costs, P.K.Rao provides a comprehensive analytical treatment of transaction cost economics and suggests a few directions for formal economic models.