Transaction costs and/or sunk costs in the milk activity

Costs related to specialized investments may differ when the theory used is transaction cost economics or the theory of contestable markets. Aiming contribute with the reflection about the issue, the study have aims to evaluate the transaction costs, especially asset specificity, and sunk costs in dairy farming. The research is exploratory in both intent and a survey as procedure, which uses data from a questionnaire administered at random in 23 milk producers of Cruz Alta/RS in 2012. The study concludes that uncertainty, frequency and specificity of the assets involved in the transactions with milk are low, which generates transaction costs expressionless. However, there are sunk costs, once those investments in specific equipment and in building have not recovered in full if the producers leave the market.