For the empirical measurement of transaction costs of public programs, no method has been available yet. Thus, a direct estimation procedure is developed and applied to transaction costs that arise in administration, banks and farms for agricultural investment subsidies in Graubünden (CH), Vorarlberg (A) und Ostprignitz-Ruppin/ Oberhavel (D). Altogether, transaction costs are estimated to reach a seventh (Graubünden) to half (Ostprignitz-Ruppin/Oberhavel) of total investment subsidies. An analysis reveals that reduced interest rates or credits free of interest may in particular lead to high transaction costs and that relative transaction costs at the regional level are generally higher than at the national or EU-level.
