Choice and Innovation of Policy Instruments from the Perspective of Transaction Costs

By using the theory of transaction costs in economics and transaction costs in politics to observe the nature of the transaction for policy activities and the governance characteristic for policy tools,we can find that to a certain extent,policy activities are also transactions. These transactions can be investigated from the perspective of contract. Relations between the government and the public can be seen as a stakeholder-based relationship: the government tries to solve the problem and reach a deal with other stakeholders by means of public policy. The policy has become a contract to solve these problems. The policy instruments with the nature of transactions imply the concept of reciprocal trade,contracts,governance and economy. Combining features of our times,the choice and innovation policy instruments find their core issues in the saving of transaction costs,promotion of innovation in policy instruments towards experience interpretation,flourishing trade-oriented policy instruments,adjusting of public transaction type policy instruments,and skillful application of mixed trade-oriented policy instruments.