Political authority, expertise and government bureaucracies |
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Authors: | Miltiadis Makris |
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Institution: | 1. Department of Economics, University of Exeter, Streatham Court, Rennes Drive, Exeter, EX4 4PU, UK 2. CMPO, University of Bristol, Bristol 3. IEPS-EMOP, Athens University of Economics and Business, Athens
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Abstract: | By applying the Revelation Principle, we focus on how a sponsor, who possesses political authority, could minimise the efficiency losses when bureaucrats are experts - that is, when they control information about the true costs of public services production. Our results come in striking contrast to those in the literature on bureaucracies and public procurement. In a two-types setting, and in the absence of monitoring and control mechanisms, we find that the agency is productively efficient. Under certain conditions, the agency is also allocatively efficient, while, under others, the low-cost bureau oversupplies and the high-cost agency undersupplies its output. |
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