Bargaining Power, Political Transaction Costs and Institutional Change: Private and Public Dental Care in Denmark 1

Rational choice institutionalism underexposes institutional change as well as the interaction between institutions at different levels, and this article therefore investigates national and local institutional change. In the Danish dental care sector private and public provision of services have coexisted since the establishment of a publicly financed dental health care system, and the fight between supporters of the two solutions has generated many institutional changes, both nationally and locally. This article analyses all Danish parliamentary proposals and local decisions regarding dental care coverage and provision. The general finding is that increasing pro‐public bargaining power seems to promote higher coverage and public provision, while increasing pro‐private bargaining power leads to stable coverage and private provision. The institutions do not, however, change whenever bargaining power changes, and national institutional change does not necessarily result in local change. The article explains this in terms of political transaction costs. These costs might also explain why national institutions change more often than local ones, and why local pro‐public changes are faster and more frequent than local pro‐private changes.