Competition and decentralisation in government bureaucracies

Maija Halonen-Akatwijuka, Carol Propper

Research output: Contribution to journalArticleResearchpeer-review

4 Citations (Scopus)

Abstract

Recent reforms to the provision of welfare services by the public sector have transferred control rights in production from politicians to managers and simultaneously introduced competition between public sector suppliers. We derive conditions under which a self-interested politician will introduce either competition and/or managerial control for services where quality matters. We show that both competition and managerial control give incentives for greater managerial effort. However the cost of competition is higher taxes and the cost of decentralisation is a loss of political benefits. The politician will introduce these reforms if the political benefits from higher value service outweigh these costs.

Original languageEnglish
Pages (from-to)903-916
Number of pages14
JournalJournal of Economic Behavior and Organization
Volume67
Issue number3-4
DOIs
Publication statusPublished - Sept 2008
Externally publishedYes

Keywords

  • Competition
  • Decentralisation
  • Government provision of services

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