Why Has the Policy of Promoting Private Participation in Infrastructure Projects Become the Choice of Taipei City Government?- Pioneering Application of Transaction Cost Theory
Chuangh-Sien Wu *, Kai-Yi Tseng **
Abstract
According to available data, the policy of promoting private participation in infrastructure project in Taipei city has caused serious principle/agent problems. However, the cases of promoting private participation are still increasing. We find that public servants know the principle/agent cost, but after comparing total transaction costs, they still choose to promote private participation in building the city’s infrastructure to provide public service.
In the article, we’ll show how commitment cost, agent cost, decision cost and uncertainty cost -- the so-called transaction cost -- can be combined to demonstrate government’s inefficiency by design.
Keywords: promotion of private participation in infrastructure policy in Taipei city, transaction cost theory, agent theory, public-private cooperation
* Assistant Professor, Department of Public Administration and Management, National University of Tainan.
** Graduate Student, Department of Public Administration and Management, National University of Tainan.