I think analytical scale is very important to your question.  If you consider a company, then all the transaction costs incurred by workers or suppliers of input materials should be regarded as part of the production costs. They are priced into wage and cost of inputs. But, the internal management of workers and the company's external relationship with the suppliers should be regarded as transaction costs.  Nevertheless, if the analytical scale is at the level of worker, then his transaction cost and production cost have a totally different meaning.

can refer to

Transaction cost measurement for evaluating

environmental policies

Klemens has correctly cited transaction costs as frictions. Frictions are not essential for production and should be minimized.

I do not think that collecting information and planning is transaction cost; it is essential part of production technology and can be fixed cost if done once, or variable if done periodically.

I will try to give my vision of transaction cost. Consider a farmer. He needs to own or to rent land, some machines, seeds, fertilizers and his labor. All these costs are essential. Now he needs to bring his output to the market. Transport cost I would also count as non-transaction, but I will put it separately, because it depends on geographical location of the market, and there may be several. Suppose now that to access the market he needs to pay some fee, or to buy license to export, or to get papers from different bureaucrats. I would put it as transaction costs, because they do not increase the value of his output.

Now consider how the work is done in organization. If the papers with orders are moved several times between floors, or the same problem is discussed on 2 meetings - these are frictions, examples of inefficiency and should be minimized. I would count them as transaction costs. They are linked to inefficiency of management, that was mentioned by Feng.

Thanks very much Feng, Mousumi, Klemens, Dan and Yuri for your valuable responses. This to to report what I found from following up the references that Dan recommended. Williamson (1981 p552) states: “[A]lthough transaction cost economizing is an important and greatly neglected topic, such economizing cannot proceed regardless of the production cost ramifications. Put differently, transaction cost economizing needs to be located within a larger economizing framework and the relevant trade-offs need to be recognized.” He does go on to say: "Transaction cost analysis supplants the usual preoccupation with technology and steady-state production (or distribution) expenses with an examination of the comparative costs of planning, adapting, and monitoring task completion under alternative governance structures." (p553) However, given his prior statement (as quoted) it seems that it is only the preoccupation that's supplanted by TC analysis; it is necessary still to account for production costs in economic analysis of organisational decisions.

In regards the the Wallis & North (1986) reference suggested by Dan, these authors defined transaction costs as "the resource costs of maintaining and operating the institutional framework associated with capturing the gains from trade". However, Allen (2000) ('Transaction costs', In Encyclopedia of Law and Economics. Volume I. The History and Methodology of Law and Economics) observe that "in the end, however, they simply separate resources devoted to transacting as their measure ... They settle for the following compromise: 'We divide occupations into those that provide primarily transaction services to the firm and, by elimination, those that provide primarily transformation services. The wages of employees in these ‘transaction occupations’ constitute our measure of the transaction sector within firms." (North & Wallis 1986, p100).

Any further thoughts?

You are trying to solve a contradiction in terms: as you say, 'The transaction costs concept was introduced so economics could understand behaviors that could not otherwise be explained (e.g, emergence of firms)'. The problem of explaining the firm is a problem only for neoclassical economics, since in the general equilibrium model, formally, there are no firms. But in other approaches you don't need to introduce the contradictory category of transaction costs. Marx for instance explained the firm simply as the elementary unit of this mode of production.

Your problem (the problem of transaction costs economics) is that you try to explain a productive organisation as a solution to imperfections within an exchange institutions. But, logically, production precedes exchange. Commodities must be produced before they can be exchanged. This is why in the very broad literature on Transaction costs economics there is no valid definition of transaction costs. If you want to develop this critique, you might have a look at "Anti-Williamson: A Marxian critique of new institutional economics", Vol. 28, N. 3, 2004, pp. 413-429.

Giulio, you are right: neoclassical economics did not think about firms' emergence and ecological niche. Agents are fixed by assumption, they can be people or firms.

I tried to think about this question in the following article and suggest readers to elaborate on that: https://www.researchgate.net/publication/271499741_Elements_of_Structural_Economics

Another question is when firms are born, whether they survive competition, how they are joined, divided, etc. There is literature about the birth and death of firms; it is in evolutionary economics.

Article Elements of Structural Economics

 Thank you Yuri but this is your approach, not mine. I don't think you understand correctly transaction costs economics, which is based on methodological individualism. Agents are necessarily individuals, not firms, as you suggest. If you were right, Coase's (1937) problem about the nature of the firm would not be a problem. I am Marxist: firms are the productive units of the capitalist mode of production. That's all.

Guilio, I am not trying to argue with Coase or Marxists. They have their own approach to what is a firm. What I tried to do in this article is to show incompleteness of neoclassical approach in economics. In particular, there is a gap in economics about emergence of structures from elements. What force brings several people to create a firm? Under what conditions this firm is stable? In physics atoms interact via different fields and under certain conditions molecules are created. This is studied further by chemistry. What is the origin of forces that "glue" people together? If somebody is interested, he or she can read my paper. But this is only an introduction to the study and further elaborations are welcome.

What you are trying to do is exactly what Coase did. As a consequence, you will fall in the same contradictions.

Would you study the creation of a molecule by abstracting from the laws of chemistry? I guess no. So why do you want to study the capitalist firm by abstracting from the laws of capital? It is not just a matter o Marx's approach or Coase's approach. One discusses the role of the firm in the capitalist mode of production, the other tries to give a role to the firm in the neoclassical model.

History, not abstract speculation, answer these questions: the capitalist firm was not created by several people willing to create it, but from the social coercion imposed by class relations, which forces a part of the population to sell its labour power to a capitalist willing to make a profit out of that. This process is guided by competition, the invisible hand that secretely enforces capital laws.

Competition is the force that 'glue' together capitalists and workers within a firm. But it can do it only because it first separates each capitalist from other capitalists and each worker from other workers, thereby forcing them to find a counterparty in the opposite class. If you enter a capitalist firm it is not difficult to see that what you call a 'glue' corresponds to what Marx called capital chain.

Only in neoclassical economics, can the nature of the (capitalist) firm have nothing to do with capital.

Guilio, I suggest you to think about small firm or a cooperative. And to find the conditions of their stability. Why productivity is higher when people work together? Specialization and division of labor? Possibility to buy jointly owned machine? This is pre-capitalist production. Members of such firm can jointly own capital and do not exploit anybody. So this stays away from Marxism which is about more polarised society. There are many firms of this type in Northern Italy. If you read my article attentively, you will see that my approach differs from both Marxism or Coase ideas.

You may also start thinking about family stability. In my article I consider the role of power that bring people together. But this is asymmetric force; one dominates the other.  I think that it is difficult to model other psychological characteristics (like love, respect, etc) that bring people together.

I also have another paper about emergence of group and competition; https://www.researchgate.net/publication/272486894_Competition_of_Self-Organized_Groups . Maybe it is a bit closer to the ideas of Coase. The larger the group - the higher are communication costs. There is analysis about optimal group size for cooperation in research. Physical capital is not relevant at all in this case.

Conference Paper Competition of Self-Organized Groups

Yuri, I'm Italian. I know how cooperatives work in the north of Italy. And I also know the role of coopearative in the capitalist mode of production: they are an effective way to delegate the exploiting process to workers themselves. Cooperatives are not at all more productive than other capitalist firms. Quite the opposite. If they exist in this mode of production, it is just a problem of fiscal regime and self-exploitation. I insist that, rather than suggesting other debaters to read your articles, the reading of Capital would solve many of your problems.

Giulio, endogenous cooperation of farmers (see https://en.wikipedia.org/wiki/Agricultural_cooperative )  was the idea prevailing in the USSR in1920ies. Later it was replaced by giant collective farms that were often mismanaged by party bosses who often had little idea about agriculture. Later (after the World war 2) Stalin encouraged small scale cooperation but it was destroyed in the time of Khrushchev. Future has shown food shortage, the necessity to export oil, and after the fall of oil prices in the end of 1980s the USSR became very weak economically. I am more positive about small agricultural cooperatives, because in this manner an optimal size for each technology and natural conditions can be found.

I was reading "Capital" (at least some chapters) before I studied neoclassical economics. I think that they are focused on different sides of economy and none of theories gives the complete picture. As for Marxism, I would suggest you to read (or recall) the fundamental work of Marx’s friend and coauthor F. Engels “The Origin of the Family, Private Property and the State”; see https://en.wikipedia.org/wiki/The_Origin_of_the_Family,_Private_Property_and_the_State . I have found this work very interesting to understand the evolution of both production technology and human economic relations. It also has inspired me to write the cited articles. I like to make mathematical models while the works of classics of Marxism are more descriptive. I also think that Marxism became a dogma. If it would be elaborated mathematically in the spirit of neoclassical economics, perhaps the USSR would not be dissolved in 1991.

But I think that we have moved away by our debates from the original question, which was about measurement of Coasian transaction costs. I still think that my 2nd reference can contribute something to that. More people means higher communication costs. Also it is not psychologically efficient to work in a group of more than 10 people, and that is why firms have hierarches of bosses. Some transaction costs also emerge here.

While  the awarding of the Noble Memorial Prize in Economic Science to Professor Coase relate to the firm, the issues to be dealt with here also relate to the domain covered in institutional economics. I suggest the work of the late Professor Elinor Ostrom, another recipient of the Noble Memorial Prize in Economic Science, is a good point of entry.

Dear Yuri, I suggest you to use  wikipaedia for technical stuff, not for political history. Moreover, would you express an opinion (or a critique) of neoclassical economics, after having read some chapters of Walras? I don't want to convince you about anything, I'm just suggesting that a critical approach, rather than a vulgar one (in the Marxist sense), might be useful for the questions you ask. If you have time and curiosity, my Marxist critique of transaction costs economics is developed in 'Anti-Williamson', Cambridge journal of economics, 2004.