By recognizing that economists use the transaction-cost methodology to account for the role of actors engaged in market exchange, this study draws from that insight as a way of delineating various critical factors that influence the effectiveness of collaborations in the public sector. Collaboration is not only about making public service delivery more efficient, but it also transcends the constant struggle for advantage and accommodation between agencies either in specific policy domains or in the control over resources and asset-specific programmatic initiatives. As organizations seek the protection of their institutional identity, culture, and power, they also set in motion corresponding processes that work in tandem to create factors that may lead to collaborative inertia. Effective collaboration therefore requires a complementary structural design (governance mechanism) that accommodates the various disincentives of asymmetry and size–power relations in complex collaborative processes.