Multi Outcome Construction Policy (final report)

Keeping this in mind, the following table outlines the various possible scenariosdescribed by Globerman and Vining (1996) and their predicted implications forbehaviour and contract outcomes.Table 2: Transaction Costs: Determinants, Responses and OutcomesEnvironment Behavioural response Implications for contractoutcomesLow task complexity,High contestability, andLow asset specificitySmall bargaining andopportunism costs. Lowercontract price and higherLow task complexity,High contestability, andHigh asset specificityLow task complexity,Low contestability, andHigh asset specificityHigh task complexity,High contestability, andLow asset specificityHigh task complexity,Low contestability, andLow asset specificityLow task complexity,Low contestability, andLow asset specificityHigh task complexity,Low contestability, andHigh asset specificityPotential for contractorto engage in hold upPotential for both partiesto engage in hold upPotential fordisagreements aboutcontract specifications &performance monitoringContractor may useambiguities ordeficiencies in contractspecification to seekcontract renegotiationefficiency ceteris paribusContractor may ask for highercontract price (to compensate forrisk of hold up)Higher bargaining andopportunism costsHigher bargaining costsHigher bargaining costsHigher opportunism costs due tolow contestabilityWorst case scenario contributesto higher bargaining andopportunism costs; higher pricesand lower efficiencyEmpirical Studies Utilising Economic FrameworksThere have been very few empirical studies of the types of multi-outcome policies and, ofthose that have been conducted, concerns have been raised about the ability to generalizetheir results. In the following paragraphs we summarise the literature relating to what canbe thought of as economic studies of the experiences of contracting government services.29