The consumption behavior of Japanese agricultural households is analyzed by a linear approximate almost ideal demand system utilizing a time series of aggregate consumption data on 15 commodity groups. Appreciable differences are observed in consumption patterns between agricultural and non-agricultural households. Some of the results in terms of income and price elasticities and of demand shifts differ to some extent from that of non-agricultural households. The second-order condition of the equilibrium is fulfilled at the sample means in this study. All cross-price elasticities are smaller than unity in absolute value. Tastes are rather conservative in agricultural households.

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　Recently in the field of agricultural finance, new analytical tools have been developed. One of these newly developed tools for analysis is the concept of transaction costs (TCs). The concept denotes costs for collecting information and managing risks, and is now recognized as quite important in the economic evaluation of the efficiency of financial intermediation. However, the concept involves theoretical and empirical clarification. This paper aims to examine the problems of the application of the concept of TCs to the empirical analysis of agricultural finance.
　First, the problem of the conventional definition of TCs is examined. The contents of TCs for sellers and buyers, the relationship between prices and TCs, and so on, are probed. Secondly, after classifying TCs in the total financial process, distinctive features and related problems of TCs are pointed out. Economies of scale, transferability, and how to measure the amount of transaction are discussed. Third, the economic behavior of financial institutions is analyzed by using TCs exclusively in the microeconomic model. Economic efficiency of transactions can be evaluated by average TCs, i.e., TCs/values of transaction. However, the level of TCs is affected by the number and the size of transactions. If the size is significantly different between two financial institutions, then it is irrelevant to compare their performances of transaction only by the average TCs. In addition, in finance, the length of the repayment period of loans can be another factor affecting TCs. Thus, details or conditions of transactions should be checked before comparing the average TCs. Finally, as an illustration of the application of TCs, lending costs of the government financial corporation and agricultural cooperatives are examined.
　In conclusion, it is emphasized that TCs can be powerful tools for analysis in agricultural finance, but need to use TCs judiciously. This concept is useful and applicable to many aspects of agricultural economy, say, the analysis of distribution systems.

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