A Comparative Approach to Explanation of the Agency’s Nature within Neo-classical and Institutionalist Theoretical Frameworks:A Case Study of an Agency in Iran’s Tire Industry

This paper aims at presenting a comparative approach to the concept and nature of agencies within neo-classical and new institutionalist theoretical frameworks. In this approach, asymmetrical information provides the grounds for transaction costs leading to a change in the nature of the agency from being the production function in the neo-classical approach to becoming agency as an organization in the new institutionalism. Based on this, agency as an organization faces two groups of transaction and exchange costs affected by institutional matrix. Then, the agency’s transaction and exchange costs are identified by analyzing the structure of the cost in a sample agency in Iran’s Tire Industry according to new institutionalism. At the end, it is shown how the government, technological institutes and mental structures as institutional matrix can affect the agency’s transaction and exchange costs and determine the level of the price of the tire product as a result.