Why transaction costs do not decrease over time? A case study of energy efficiency programmes in Czechia

Abstract

Transaction costs have a negative impact on the implementation and effectiveness of energy efficiency policies, while they remain rarely systematically tracked and evaluated. Transaction costs should decrease over time, thanks to the ageing of the policy (and the effects of learning) and the prevalence of initial, fixed costs. However, we find that the opposite may be true.We examine the effect of time and learning on the structure and size of transaction costs by using a data set of two programmes in two programming periods (2007–2013 and 2014–2020). We find that despite the continuity of the programmes, the burden of transaction costs in both cases increased significantly. The potential gains from learning throughout the programmes are overrun by constant internally and externally driven changes to the programme. In addition, through the course of the programmes, smaller and more complicated projects prevail. Lastly, due to internal organisational changes among the recipients, there is little institutional memory and distribution of information.An early thorough preparatory phase of a programme and stability of the institutional environment increase the effectiveness of the programmes. Differentiating the administrative processes according to the size of projects, with simplified procedures for smaller projects, may further decrease administrative intensity.