The Political Economy of Public Administration : Institutional Choice in the Public Sector (Political Economy of Institutions and Decisions)

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Summary: Transaction cost theory and public administration
Review: Transaction cost theory has been applied to public administration since early 1980s. However, most of these researches are not very sucessful, thus making many public administration theorists suspect the promises of using transaction cost theory to public administration. It is at this critical point that Horn prove to us that transaction cost theory is an attractive theory for public administration research. The Horn model is concentrated on the legislature institutional choices. To him, institutional choices of the legislature will be affected by various transaction costs, and the legislature must trade-off among these transaction costs. It is obvious that the Horn model had followed the Williamsonian transaction cost theory rather than North's perspective of transaction cost theory. However, different from other theorists using Williamsonian transaction cost theory to public administration, Horn had not limited himself to the narrowing category of Market and Hierarchy. In sum, this Horn model combined recent work of Williamson (Private and public bureaucracy: perspective of transaction cost theory, 1999)has convinced students like me that transaction cost theory is a productive perspective for public administration research.