A critical review of the application of tce in the interpretation of risk allocation in PPP contracts

Along with the rise of public-private partnerships (PPPs) as a mainstream procurement system, we have seen a growing interest in studies of risk allocation in these projects. One of the serious academic endeavours is to apply both transaction cost economics (TCE) and the resource-based view (RBV) to explain risk allocation patterns found in PPP projects. The existing literature along these lines is deficient in three aspects: inappropriate choice of unit of analysis; poor specification of governance structure; and misinterpretation of asset specificity. A way for improvement is to analyse risk allocation in the context of PPP procurement in its entirety.