|Contracting out of public services is to a great extend used by Norwegian municipalities to produce public services. The use of private actors in public services is on numerous occasions debated in public forums and in media. Especially does this apply for traditional welfare services. Norwegian municipalities have the opportunity to a great extend to decide whether to produce services in-house or make use of the marked. This thesis examines the effect of ideology, fiscal pressure and size on contracting out in Norwegian municipalities. Also, this analysis investigates the effect of the individual variables on an aggregate level, but also how transaction cost effect contracting on different sectors, namely technical, health and social services and pre-school. The results are produced by the use of multiple regression analysis, and is partly based on a similar study conducted in Danish municipalities. The data used in this paper are collected from KOSTRA in the year of 2018, and the election results from 2015. The results reveal that ideology effects contracting on both the aggregated level and in health and social services. However, ideology does not influence contracting on neither technical services nor pre-school. The results further show that fiscal pressure has no effect on technical or health and social services, nor on an aggregated level. Prosperous municipalities contract more pre-school than less affluent municipalities, hence pre-school is the only sector that are influenced be economic pressure. Finally, size influence contracting on health and social services and pre-school, whereas size doesn´t effect contracting of technical services or contracting on an aggregated level independent on the service in question.