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To Plan or Not to Plan, That is the Question: Transaction Cost Theory and its Implications for Planning

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  • E R Alexander

    (Department of Urban Planning, University of Wisconsin-Milwaukee, PO Box 413, Milwaukee, WI 53201, USA)

Abstract

Planning has been associated with public intervention, in contrast with the “free†market. The transaction cost theory of planning bridges this dichotomy, suggesting instead the link between planning and hierarchical organizations and networks in the public and private sectors alike. The implications of this theory are that: (1) the scope and limits of planning are not based on the rationales for public intervention, but depend on the need for more hierarchical or more market-like forms of organization; (2) planning as coordination demands coordinative planning as well as traditional strategic planning, culminating in institutional design; (3) these forms of planning are associated in varying degrees with different types of organizations, characterized by size, complexity, and degree of hierarchy; (4) with growing societal complexity and interdependence, the demand for coordinative planning and institutional design will rise. Planning practice will have to incorporate coordinative planning and institutional design, and planning education needs to equip planners for these types of practice.

Suggested Citation

  • E R Alexander, 1994. "To Plan or Not to Plan, That is the Question: Transaction Cost Theory and its Implications for Planning," Environment and Planning B, , vol. 21(3), pages 341-352, June.
    • Handle: RePEc:sae:envirb:v:21:y:1994:i:3:p:341-352
    DOI: 10.1068/b210341
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    References listed on IDEAS

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    1. Richard F. Elmore, 1987. "Instruments And Strategy In Public Policy," Review of Policy Research, Policy Studies Organization, vol. 7(1), pages 174-186, September.
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