Between prescription and practices in Seoul Metropolitan city: Institutional constraints and relational contracting

Public choice theories suggest contracting out as a cure-all for various weaknesses of government bureaucracy and its absence of competition. The transaction cost economics theory challenges these theories, arguing that competitive contracting is appropriate only for hard services like human waste collection while relational contracting is for soft services such as welfare facility management. After examining contracting practices of 25 district governments of Seoul Metropolitan Government, however, this study found that informal institutional constraints led district governments to adopt relational contracting for human waste collection and to adopt competitive contracting for welfare facility management.