Contracting and Transaction Costs in the Public-Private Partnership. A Conception the Light of the New Institutional Economy

Public-private partnership (PPP) is one of the methods of financing and satisfying the public needs, while limiting the public sector’s role to an indispensable minimum. Prior to making decision on carrying out a public task by the PPP method, the public sector is due to prove higher effectiveness of this method compared to the traditional financing method. The necessary process of long-lasting analyses and negotiations can lead to generation of transaction costs higher than in the case of the traditional model of financing. Till now, in the pertinent literature little attention has been paid to transactional costs related to the establishment and maintenance of the public-private partnership; hence the attempt at revealing the determinants of transactional costs inherent in the contracts realized under the PPP formula.