Forging Enhanced Collaboration: Investigating Transaction Costs in Pre-Design Phase of Market-Oriented Community Renovation in China

In the context of urban regeneration, community renovation has been a vital approach for improving local living conditions and global sustainable development. Due to the financial burden and uneven regional development, China’s community renovation has gradually shifted from the government-led model to the market-oriented model. However, these projects are subject to various intra- and inter-stakeholder barriers, particularly hidden transaction costs. This study investigates the transaction costs experienced by key stakeholders, including residents, developers, governments, and architects, with a specific focus on the pre-design phase of market-oriented community renovation projects in China. Data on stakeholders’ experienced transaction costs and their origins were collected through semi-structured interviews and questionnaire surveys and were investigated using content analysis and quantitative analysis. Results show that developers bear the most categories of transaction costs. The most significant transaction costs persist in the interactions between developers and governments, including estimating benefits and costs and receiving project approval. Furthermore, negotiating costs are the primary obstructions that hinder stakeholder collaboration. By tracing the origins of these transaction costs, the study proposes measures to optimize the renovation process by reducing transaction costs.