The effects of multiple objectives in the theory of public sector supply

This paper incorporates objectives of both legislators and bureaucrats in a model of public sector decisionmaking. Existing models assume that either bureaucrats control production information and decisions, (Niskanen-type models) or legislators control production decisions (legislative models). My model explicitly incorporates imperfect agent behavior and corresponding preferences of both legislators and bureaucrats to reflect the bilateral nature of appropriations. The analysis shows that output levels generally differ from politically and socially efficient levels and depend on the relative weights of legislative and bureaucratic interests. Accordingly, Niskanen-type and legislative models are viewed as special cases of this more general approach.