We discussed tangential points not so long ago (in "The Ownership Obsession")

"Transaction costs can be somewhat tautological. If it appears that there are foregone gains from trade, the explanation can always be framed as due to some type of transaction cost.""Transaction costs can be somewhat tautological. If it appears that there are foregone gains from trade, the explanation can always be framed as due to some type of transaction cost."

Josh goes on to discuss Earl Thomson's idea of "cooperation costs," which I must confess sound like THE same thing:

what he meant by cooperation costs are costs associated with communication, coordination, and commitment among economic actors. His argument was that cooperation costs were important for thinking about sequential decision-making. In particular, he argued that when people engage in strategic, sequential decision-making, cooperation costs become really important.
He argues that this concept can explain why certain places seem to end up in development traps, why sometimes our policies to deal with externalities seem inconsistent with lessons from introductory economics, as well as why the criminal justice system is structured in the way that it is.

What I understand is that it's a bit like what Scandi labor movements of the mid-20th century achieved. Instead of narrowly expropriating the capitalists via strikes and wage hikes today, they grew large and internalized the discounted future benefit of a flourishing industry -- basically credibly promising to withhold from interrupting future investments made by the capitalists. So we got plenty of investments, lots of growth, and wealth all around.

Thompson argued that states that escape such development traps are those that are able to find solutions to these investment problems and create institutions that prevents the expropriation of gains from trade from early investors. He also argued that this is one reason why states that have substantial internal social conflict might be more susceptible to development traps: the cost of initial cooperation and ex post expropriation is substantial.

Josh explores this concept in two more domains: externalities (well, pollution) and crime&punishment, with someinteresting considerations for whether punishment ought to be strictly via prison sentences (fines are more economically efficient, and fines+prison combos with criminal proceedings happening after civil ones to be preferred).

Thompson’s idea of cooperation costs is an example of the sort of analysis that UCLA price theorists were known for. By focusing on particular types of costs and how those costs influence the nature of exchange, he was able to formulate hypotheses about why countries end up in development traps, why quantity regulations are sometimes used to deal with externalities, and why the state uses imprisonment rather than fines as punishment for crime.