Property rights and transaction costs in public administration

Abstract

This paper outlines the major global economic changes observed from the establishment of the Bretton Woods economic order until the late 1970s in order to explain how these generated a shift away from favorable opinion regarding the state and public administration, determining substantial changes in both. The provisions for these transformations mainly arose from neoclassical ideology, and were strongly championed by the Chicago and Virginia Schools, where analysis of the state and its administration from economic precepts of this nature were developed. Along with other innovations generated in private management, these ideas gave rise to a model of public administration reform called the "New Public Management", whose elements are the customers, markets, competition and contracts. However, this model is no more than a privatization oriented inward to public administration (endoprivatization). Although there are several components of the new public management, in this case we will discuss ideas related to the principles relating to "transaction costs", arguments that have been used to recommend the establishment of "property rights markets" in the administration of common issues. These notions are some of those identified as appropriate channels for promoting competition in public administration.