Developments: The Politics of Transaction Costs

Abstract

This article aims to develop a model for analysing the operation and outcomes of the contracting process as it applies to public services, and to explore the politics of transaction costs involved in this process using a case study of Compulsory Competitive Tendering (CCT) in the UK. For this purpose the article deals with the policy outputs from two time periods, 1991 and 1994, which are regarded as the most dynamic years in terms of CCT policy implementation. The article also demonstrates how transaction costs may be manipulated in the contracting process by the interested parties. Finally, it suggests that the politics of transaction costs should be studied systematically in the future.