Private Transaction Costs in Public Sector Contracting

Ole Helby Petersen, Jesper Rosenberg Hansen, Anders Ryom Villadsen, Kurt Houlberg

Research output: Contribution to conferencePaperResearch

Abstract

Private companies contract with governments to deliver a broad range of goods and services such as construction, infrastructure, health care, facility management and much more. Such relationships implicate transaction costs, broadly understood as “all the cost which do not exist in a Robinson Crusoe economy.” (Cheung, 1998; 515). However, whereas most previous literature has focused on the transaction cost considerations of governments in the public/private contracting relationship, much less scholarly attention has been devoted to the transaction costs of private companies in the relation. This paper aims to address part of this knowledge gap by examining the pre-contractual transaction costs of private companies vending services and products in contracts with governments. First, we draw on transaction cost theory and broader economics and industrial organization literature to develop a framework that combines theoretical and firm-, contract-, and government-level transaction cost factors. Second, we utilize data from a unique survey of Danish companies to examine the magnitude and determining factors of companies’ transaction costs across eight industries that regularly contract with the public sector. Our findings underline the need for taking private companies’ transaction costs more seriously in the planning and execution of public sector contracting to maximize the likelihood of win-win outcomes for government and business.

Original languageEnglish
Publication date2018
Publication statusPublished - 2018
EventXXII Annual IRSPM Conference - University of Edinburgh, Edinburgh, United Kingdom
Duration: 11 Apr 201813 Apr 2018

Conference

ConferenceXXII Annual IRSPM Conference
LocationUniversity of Edinburgh
CountryUnited Kingdom
CityEdinburgh
Period11/04/201813/04/2018

Cite this

Petersen, O. H., Hansen, J. R., Villadsen, A. R., & Houlberg, K. (2018). Private Transaction Costs in Public Sector Contracting. Paper presented at XXII Annual IRSPM Conference, Edinburgh, United Kingdom.
Petersen, Ole Helby ; Hansen, Jesper Rosenberg ; Villadsen, Anders Ryom ; Houlberg, Kurt. / Private Transaction Costs in Public Sector Contracting. Paper presented at XXII Annual IRSPM Conference, Edinburgh, United Kingdom.
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Petersen, OH, Hansen, JR, Villadsen, AR & Houlberg, K 2018, 'Private Transaction Costs in Public Sector Contracting' Paper presented at, Edinburgh, United Kingdom, 11/04/2018 - 13/04/2018, .

Private Transaction Costs in Public Sector Contracting. / Petersen, Ole Helby; Hansen, Jesper Rosenberg; Villadsen, Anders Ryom; Houlberg, Kurt.

2018. Paper presented at XXII Annual IRSPM Conference, Edinburgh, United Kingdom.

Research output: Contribution to conferencePaperResearch

TY - CONF

T1 - Private Transaction Costs in Public Sector Contracting

AU - Petersen, Ole Helby

AU - Hansen, Jesper Rosenberg

AU - Villadsen, Anders Ryom

AU - Houlberg, Kurt

PY - 2018

Y1 - 2018

N2 - Private companies contract with governments to deliver a broad range of goods and services such as construction, infrastructure, health care, facility management and much more. Such relationships implicate transaction costs, broadly understood as “all the cost which do not exist in a Robinson Crusoe economy.” (Cheung, 1998; 515). However, whereas most previous literature has focused on the transaction cost considerations of governments in the public/private contracting relationship, much less scholarly attention has been devoted to the transaction costs of private companies in the relation. This paper aims to address part of this knowledge gap by examining the pre-contractual transaction costs of private companies vending services and products in contracts with governments. First, we draw on transaction cost theory and broader economics and industrial organization literature to develop a framework that combines theoretical and firm-, contract-, and government-level transaction cost factors. Second, we utilize data from a unique survey of Danish companies to examine the magnitude and determining factors of companies’ transaction costs across eight industries that regularly contract with the public sector. Our findings underline the need for taking private companies’ transaction costs more seriously in the planning and execution of public sector contracting to maximize the likelihood of win-win outcomes for government and business.

AB - Private companies contract with governments to deliver a broad range of goods and services such as construction, infrastructure, health care, facility management and much more. Such relationships implicate transaction costs, broadly understood as “all the cost which do not exist in a Robinson Crusoe economy.” (Cheung, 1998; 515). However, whereas most previous literature has focused on the transaction cost considerations of governments in the public/private contracting relationship, much less scholarly attention has been devoted to the transaction costs of private companies in the relation. This paper aims to address part of this knowledge gap by examining the pre-contractual transaction costs of private companies vending services and products in contracts with governments. First, we draw on transaction cost theory and broader economics and industrial organization literature to develop a framework that combines theoretical and firm-, contract-, and government-level transaction cost factors. Second, we utilize data from a unique survey of Danish companies to examine the magnitude and determining factors of companies’ transaction costs across eight industries that regularly contract with the public sector. Our findings underline the need for taking private companies’ transaction costs more seriously in the planning and execution of public sector contracting to maximize the likelihood of win-win outcomes for government and business.

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M3 - Paper

ER -

Petersen OH, Hansen JR, Villadsen AR, Houlberg K. Private Transaction Costs in Public Sector Contracting. 2018. Paper presented at XXII Annual IRSPM Conference, Edinburgh, United Kingdom.