Assessing market efficiency: A transaction costs approach

Government regulations through import licensing and "seasonal calendars" entail large transaction costs for traders operating in the fruit and vegetable wholesale market in Oman. Monitoring and enforcing these market regulations increase search costs and reduce market efficiency. The objective of this study is to develop a methodology to categorize and measure transactions costs by analyzing traders perceptions and attitude toward regulatory measures, and other market activities. Results show that importers operating at Al-Mawaleh market face the highest level of transaction costs. The changing nature of import calendar as well as the import license procedure represents significant elements of uncertainty that rise the importers' search and monitoring costs. It is suggested that the conversion of these non-tariff barriers into tariffs along WTO rules would reduce market uncertainty and increase market efficiency.