The Role of Transaction Costs in the Delivering of Urban Infrastructure Services: An Overview of Brazilian and Portuguese Municipalities

The theme of this paper is the delivery of urban infrastructure services in large Portuguese and Brazilian municipalities. With reduction of human and financial resources and increase in demand, large cities need efficient instruments to provide urban services to improve the level of service to the population. In fact, the conditions for providing these services influence the quality of life, the economic development and are directly related to the capacity of institutions to find the most appropriate governance mechanisms. In this context, the use of Transaction Costs Theory, specifically economic and political costs, reveals an appropriated tool to understand the ways how public services can be delivered. Existing research and theory point out several studies around the world that analyze how different governance mechanism’s choice (hierarchy, market and network) can be explained based on Transaction Costs Theory. However, this paper contributes to expand this topic in Brazilian’s municipalities context, due to the lack of studies in this country. Inversely, there are some studies about Portuguese’s municipalities. But as this process is dynamic, it becomes interesting update such studies in order to expand the existing database. The objective of this paper is to build an overview of the options for delivering urban infrastructures services in large Portuguese and Brazilian municipalities, under the topic of Transaction Costs Theory. The study will be developed based on a quantitative approach and statistical analysis, where 10 urban infrastructure services will be analyzed by sending surveys to 24 Portuguese municipalities with more than 100,000 inhabitants and 46 municipalities with more than 500,000 inhabitants, considering as large municipalities. As independent variables will be considered the population, population density, employee’s expenses, municipal debt, political parties, political cycles, asset specificity, measurement difficult and frequency of service provision. The dependent variable will be the governance mechanisms adopted (form of service delivery). From a theoretical point of view this study will contribute to database’s enlarge on the provision of urban infrastructure services with a comparative perspective between two countries historically linked and, from a practical point of view, it will serve as a tool to large municipalities analyze, among various forms of service, which may be more appropriate in each situation.