This chapter began with a brief discussion of the legal foundations of markets. Hayek (1994) is a three-volume examination of the role and functions of law and legislation in free societies. The literature on property rights and contract law is vast. Bethell (1998) and Pipes (2000) are excellent book-length examinations of broader issues surrounding property rights. Barzel (1997) is a useful book-length examination of the economics of property rights.
Harberger (1971) is a classic reference on applied welfare economics. Friedman (1990, chapter 15) contains an excellent discussion of different efficiency concepts. Nicholson and Snyder (2009, chapter 8) provides a good overview of competitive markets and long- and short-run equilibrium. Boadway and Bruce (1991), Johansson (1987) and Johansson (1991) contain useful discussions of the basic principles of welfare economics. Jones (2005) is an advanced treatment.
The analysis of per unit transaction costs in this chapter is inspired by Alchian and Allen (1983, pp. 48-50). Spulber (1999) is a book-length examination of endogenous transaction costs and the role of intermediaries and middlemen. Stavins (1995) contains an excellent analysis of transaction costs in the context of markets for tradeable pollution permits.