This article examines the effect of participatory governance on policy performance in the United States, which is shaped by external and internal factors related to transaction cost. Externally, if transaction-cost-related policy conditions are uncertain-thereby increasing transaction cost-the effect of participatory governance on policy performance is less positive. Internally, noninstitutionalized participatory governance methods (e.g., public meetings) are less effective than institutionalized ones in improving policy performance (e.g., advisory committees). In addition, these internal and external factors affect the choice of participatory governance methods by government agencies: agencies are more likely to employ institutionalized participatory governance methods under low-transaction-cost policy conditions.

Diverse public administration and governance studies have argued that leviathan governments are no longer capable of efficient administration and that new governing structures should be substituted for traditional government regulations. Nevertheless, a large regulatory structure remains intact in the United States. This paper explores why traditional government regulation has persisted even in the era of new governance. Several regression tests indicate that bureaucratic attempts to secure the survival of agencies rather than administrative effectiveness determine the extent of regulation.