Contractual Arrangements and the Provision of Public Interest Services: A Transaction Cost Analysis

The Role of the State as Guarantor of Public Services: Transaction Cost Issues and Empirical Evidence

“…A recent empirical study of the provision of water in France by Huet and Saussier (2003) supports the ability of the transaction cost approach to provide meaningful results. Analysis of the links between the characteristics of the service, contractual choices made by local authorities and observed performance has the result that ‘organization matters’ and the governance structure has an impact on performance.…”

“…Such findings concern selected organizational forms (e.g., public‐private cooperation), specific local‐authority‐supplied public services and various deregulated markets. Second, overall there is much empirical evidence that public service missions with a high degree of complexity necessitate the creation of models of the guarantor State of a corresponding degree of complexity which, because of that very characteristic, entail higher transaction costs. Third, empirical evidence further rests on the assumption that considerable differences of interest between players and asymmetries of information in contractual relations will influence the level of transaction costs in a negative manner. Fourth, the effect of probity and trust as potential determinants of the transaction costs is not explicitly analyzed in empirical research yet. Although, there are sound arguments that mutual trust in the relationship between partners ( intuitu personae principle) can have significant influence on the costs of the provision and safeguarding of specific public services in the long run (see arguments in e.g., Chong et al 2006, Huet and Saussier 2003, Cox 2003, 1999, Boerner and Macher 2002 and Williamson 1999). …”

“…This applies for the phase in which the contract partner is selected and for the period of execution of the contract after successful application. Examples of case studies are to be found for, e.g., Germany in Snethlage (2001), Kruse (2001), Scholl and Thöne (1997); Sweden in Mattisson and Thomasson (2007); France in Huet and Saussier (2003); Australia in Young (2003); UK in Grimshaw et al (2002). For a recent survey of the literature, see Jensen and Stonecash (2004).…”

Public private partnerships: a multidimensional model for contracting

“…concessions, lease, management contracts) and areas of application (e.g. provision of utility services, education and health care) from various theoretical perspectives, including, but not limited to, transaction cost economics (Crocker and Masten, 1996;Huet and Saussier, 2003), agency theory (Guasch, Laffont and Straub, 2003) and property rights theory (Hart, 2003;Bennet and Iossa, 2003). In particular, one area of research has focused on comparative analyses of different contractual arrangements in the provision of public services (e.g.…”

“…In particular, one area of research has focused on comparative analyses of different contractual arrangements in the provision of public services (e.g. Crocker and Masten, 1996;Huet and Saussier, 2003). These studies neglect the fact that factors other than economic efficiency play an important role.…”