LOCAL GOVERNANCE - THE RELEVANCE OF TRANSACTION COST ECONOMICS

Only relatively recently have the implications of transaction cost eco nomics (TCE) for local governance been appreciated. TCE appears to off er a weapon against fragmentation. This paper uses contracting for soc ial housing management to illustrate the possibilities. However TCE ha s attracted considerable criticism both inside and outside economics. Any analysis seeking inspiration from TCE should be informed by an und erstanding of the central critical concerns. This paper suggests that TCE currently offers limited assistance to the analysis of local servi ce organisation. Analysis of local governance which seeks inspiration from the economics literature must move beyond TCE to more institution ally sensitive approaches.