ANALYSES OF THE MAGNITUDE AND DETERMINANTS OF TRANSACTION COSTS IN PUBLIC-PRIVATE PARTNERSHIPS (PPPS)
Keywords:Public-private partnership, Transaction costs, Trust, Public sector provision
Purpose: Prior research indicate that there is a significant amount of resources required. However, few researchers seem to measure transaction costs directly. The purpose of this paper is therefore to fill this knowledge gap by presenting estimated transaction costs from both public and private actors.
Design/methodology/approach: This study is a part of our field project. Operationally, focused interviews were used to clarify any ambiguities.
Findings: The study shows that transaction costs particularly are impacted by levels of trust—even though the public administration’s level of trust in the private sector was higher than expected. The authors also found that reservations against PPPs on the political level increased the likelihood of mismanagement (regarding contract design and implementation) and delays. Politicians need to rethink how they communicate with officials to minimize these problems.
Originality: The paper makes an important contribution to the literature by reflecting on trust relations in PPPs, as well as providing empirical evidence for higher transaction costs in PPPs, compared to entirely public sector provision.
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