For two decades, the procurement of public services (e.g. transport, water supply, energy, telecommunications) has been engaged in a process of intensive changes, particularly in Europe, where the reforms of network industries represent a decisive step toward the construction of a unique market. Both at the local and national levels, public authorities have been willing to introduce new regulatory regimes and to modify the existing governance structures of utilities. In this context of reforms, franchising public services is often seen as a tool of decision makers to allow private sector participation, introduce ex ante competition and therefore improve the performances of network industries while retaining some degree of control. However, at the theoretical level, many questions arise about the practicability and efficiency of this form of governance for providing public services. According to incomplete contract theories, granting concessions to the private sector for the right to operate a public service can be an efficient alternative to public procurement only under certain institutional and transactional conditions that this workshop intends to review. The presentation of several experiences of utilities reforms will then give the opportunity to the workshop participants to appreciate the relevance of the theoretical propositions.

The ‘empirical success story’ of TCE lies on cross-sectional studies which show that firms choose the contractual arrangements of their transactions according to transaction cost principles. In other words, these empirical studies investigate the degree to which organizational forms and contractual design are aligned to transaction features and indirectly the degree to which they minimize transaction costs. The results of these studies show strong support for TCE predictions as regard organizational and contractual choices.

However, as regard the performance impact of alternative governance structure choices, e.g. the choice of market versus hierarchies, or the choice of long-term contracting versus arm’s length arrangements, it is only recently that new types of tests have been developed to move beyond the TCE conventional empirical research, that is to say beyond the analysis of the determinants of organizational choices.

The objective of this workshop is to review the new methodologies in TCE empirical research, what we have called the “second generation” empirical studies in TCE.