Transaction cost in the context of "Public–private partnership"

An international organization, also called an intergovernmental organization (IGO) or an international institution, is an association of states established by a treaty or other type of instrument governed by international law to pursue the common aim of its member states. An IGO possesses its own legal personality separate from its member states and can enter into legally binding agreements with other IGOs or with other states. The United Nations, Council of Europe, African Union, Organization of American States, North Atlantic Treaty Organization, Mercosur, and BRICS are examples of IGOs. International organizations are composed of primarily member states, but may also include other entities, such as other international organizations, firms, and nongovernmental organizations. Additionally, entities may hold observer status. Under international law, although treaties are typically between states, intergovernmental organizations also have the capacity to enter into treaties. The traditional view was that only states were subjects of international law, but with the founding of the United Nations, that view expanded to include intergovernmental organizations.

Within the international relations literature, international organizations facilitate cooperation between states by reducing transaction costs, providing information, making commitments more credible, establishing focal points for coordination, facilitating the principle of reciprocity, extending the shadow of the future, and enabling interlinkages of issues, which raises the cost of noncompliance. States may comply with the decisions of international organizations, even when they do not want to, for rational cost-benefit calculations (to reap concrete rewards of future cooperation and avoid punishment) and normative reasons (social learning and socialization).

Purchasing power parity (PPP) is a measure of the price of specific goods in different countries and is used to compare the absolute purchasing power of the countries' currencies. PPP is effectively the ratio of the price of a market basket at one location divided by the price of the basket of goods at a different location. The PPP inflation and exchange rate may differ from the market exchange rate because of tariffs, and other transaction costs.

The purchasing power parity indicator can be used to compare economies regarding their gross domestic product (GDP), labour productivity and actual individual consumption, and in some cases to analyse price convergence and to compare the cost of living between places. The calculation of the PPP, according to the OECD, is made through a basket of goods that contains a "final product list [that] covers around 3,000 consumer goods and services, 30 occupations in government, 200 types of equipment goods and about 15 construction projects".

A financial market is a market in which people trade financial securities and derivatives at low transaction costs. Some of the securities include stocks and bonds, raw materials and precious metals, which are known in the financial markets as commodities.

The term "market" is sometimes used for what are more strictly exchanges, that is, organizations that facilitate the trade in financial securities, e.g., a stock exchange or commodity exchange. This may be a physical location (such as the New York Stock Exchange (NYSE), London Stock Exchange (LSE), Bombay Stock Exchange (BSE), or Johannesburg Stock Exchange (JSE Limited)), or an electronic system such as NASDAQ. Much trading of stocks takes place on an exchange; still, corporate actions (mergers, spinoffs) are outside an exchange, while any two companies or people, for whatever reason, may agree to sell the stock from the one to the other without using an exchange.

A public–private partnership (PPP, 3P, or P3) is a long-term arrangement between a government and private sector institutions. Typically, it involves private capital financing government projects and services up-front, and then drawing revenues from taxpayers and/or users for profit over the course of the PPP contract. Public–private partnerships have been implemented in multiple countries and are primarily used for infrastructure projects. Although they are not compulsory, PPPs have been employed for building, equipping, operating and maintaining schools, hospitals, transport systems, and water and sewerage systems.

Cooperation between private actors, corporations and governments has existed since the inception of sovereign states, notably for the purpose of tax collection and colonization. Contemporary "public–private partnerships" came into being around the end of the 20th century. They were aimed at increasing the private sector's involvement in public administration. They were seen by governments around the world as a method of financing new or refurbished public sector assets outside their balance sheet. While PPP financing comes from the private sector, these projects are always paid for either through taxes or by users of the service, or a mix of both. PPPs are structurally more expensive than publicly financed projects because of the private sector's higher cost of borrowing, resulting in users or taxpayers footing the bill for disproportionately high interest costs. PPPs also have high transaction costs.