The competitive advantage of towns: transaction costs and innovation in a rural service town

This research, on the social and cultural context of the economy in Hamilton, a rural Victorian service town, demonstrates how close knit, geographically localised social networks serve to lower many transaction costs for local businesses. Different social arrangements may raise or lower the transaction costs of economic activities and influence people's access to economic opportunities. This paper considers the implications of lower transaction costs for the efficiency and innovative ability of businesses based in rural service towns and argues that, while the isolation of rural towns means they are often considered economically disadvantaged, local businesses may possess important competitive advantages over their metropolitan counterparts.