Public Policy,Transaction Cost and Governance Mechanism:Exploring Transaction Cost in Public Policy Studies

The theory of transaction cost is a useful framework under which political issues are analyzed.From the perspective of the transaction cost theory, a public policy can be seen as a political deal between policy-makers and citizen voters, which in essence, is a political contract.Due to some human factors and such environment factors in which such a contract is made, as limited rationality, opportunism, inadequate information, uncertainty and complexity, there exist great transaction costs in the formulation and implementation of public policies.It will be of great help to improve the policy efficiency and realize the policy goal through analyzing the transaction costs and designing cost-saving governance mechanisms.