Digitization of Transaction Terms within TCE: Strong Smart Contract as a New Mode of Transaction Governance
用交易成本经济学定义交易条款数字化，分析强智能合约（自动执行且不可逆转）如何构成一种新的交易治理模式，并探讨其相对于市场、层级和混合模式的优劣条件。
We use transaction cost economics (TCE) to define the “digitization of transaction terms” shift parameter that describes the institutional changes associated with increased digitization in society. We then draw on legal scholarship to analyze how strong smart contracts, which refer to agreements with automatic execution and enforcement that are not reversible by courts, rely on a new level of digitization of transaction terms. Specifically, these contracts may rely on standard digital infrastructures such as blockchain systems that guarantee automatic execution and non-reversibility. Strong smart contracts represent a distinct mode of transaction governance compared to markets, hierarchies, or hybrids. This is because each classic governance mode is distinguished by how ex post adaptation is handled—through public courts, managerial fiat, or both. In contrast, strong smart contracts prevent ex post adaptation altogether. We propose that when strong smart contracts can be fully specified, they may dominate other governance modes based on certain trade-offs. These trade-offs include weighing the benefits of avoiding the holdup problem and lowering contract enforcement costs against the downsides of high ex ante specification costs and the elimination of flexibility to make ex post adjustments in a changing environment. Our discussion elaborates on which institutional conditions can further facilitate this institutional shift.