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The use of transaction cost tools in economic analysis provided strong foundation for the development of new institutional economics. The concept, which centers on microeconomics, seeks to evaluate the impact created by price, supply, demand and other related variables to the nature and volume of goods and services offered in markets. Despite the complexity associated with mainstream economics, experts have been able to track changes and identify trends through the use of analytical tools.

The article presents discussions by economists on various papers that are published in the May 1, 1953 issue of the journal "American Economic Review." The discussion based on economist Lyle C. Fitch's paper, which dealt with expenditures of government in the U.S., states that at the beginning of his analysis, Fitch called attention to variables affecting public expenditures. Among them, Fitch listed the size of the population and the amount and the cost per unit of benefits and services provided for each person. He held growth in the national income or product to be an indirect influence tending to increase public expenditures. But Fitch found the effect of these variables impossible to measure. He also pointed out that the distribution of increases is to be considered in any appraisal of their effect. Fitch also stated that an urban community requires greater variety of services. He doubted whether the adjustment of expenditures by a consumer price index necessarily corrects changes in prices, by the government.