ABSTRACT
This entry provides an overview of political markets as a framework for organizing inquiry into the interactions of actors and the barriers to contracting. It traces the provenance of political markets as an analytical tool to New Institutional Economics, which represents the works of prominent scholars like Ronald Coase, Douglass North, and Oliver Williamson, among others. It then explores political markets and the attendant hazards in political contracting. Political markets involve many heterogeneous players, complex agency relationships, ill-defined and ambiguous terms of contract, different media of exchanges, intractable property rights, low-powered incentives, and problems in ensuring credible commitments. The entry also presents some applications of transaction-cost politics in local and regional governance—ranging from public service delivery, land use, urban growth, and economic development to interlocal cooperation. It concludes with some general directions for future research.
