Efficiency of Public Sector Organizations: Perspectives from Theories of Bureaucracy
Abstract
Economic insights on the provision of public goods and services by public sector organizations went hand in hand with probing questions on the efficient allocation of resources within them concerning neo-classical assumptions on the theory of firm (Coase 1937, Alchian and Demsetz 1972). The rationale behind the unprecedented divergences from the neo-classical firm postulations on the basis of not-to-operate at the efficient production frontier has attracted attentions of researchers working not only on the private firms but also on the public sector. This paper investigates theoretical underpinnings of efficient allocation of resources within public sector organizations on the basis of a variety of arguments. Before examining the (in)efficient usage of resources in the public sector that is mostly based on the theory of bureaucracy, methodological and practical challenges to measure the efficiency performances of public intuitions are visited. Subsequently, institutional framework on the public provision of goods and services is scrutinized referring particularly to the discussion on incentive schemes and efficiency.References
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[38] Niskanen, W.A. 1971. ‘Bureaucracy and representative government’. In: Okun, A.M. 1975. Equality and efficiency: The big trade off. Brookings Institution Press.
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[40] Pedraja-Chaparro, F., Salinas-Jimenez, J., and Smith, P. 2005. Assessing public sector efficiency: Issues and methodologies, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2018855.
[41] Pigou, A. 1920. The Economics of Welfare, London: Macmillan and Co..
[42] Rogoff K. 1985. The optimal degree of commitment to an intermediate monetary target. The Quarterly Journal of Economics, 100(4): 1169 – 1189.
[43] Rosanvallon, P. 2000. The new social question: rethinking the welfare state, Princeton University Press.
[44] Schultz, C. 2003. Information, polarization and delegation in democracy, Economic Policy Research Unit, Institute of Economics, University of Copenhagen.
[45] Stone, M. 2002. How not to measure the efficiency of public services (and how one might). Journal of the Royal Statistical Society: Series A (Statistics in Society), 165(3): 405 – 434.
[46] Tullock, G. 1965. The politics of bureaucracy. 1st edn. Michigan: Public Affairs Press.
[47] Tullock, G. 1997. Economics of income redistribution, Kluwer Academic Publishers Boston.
[48] Weber, M. 1947. Legitimate authority and bureaucracy, Organization theory, Penguin Books, London.
[49] Weisbrod, B.A. 1988. The nonprot economy. Cambridge MA., Harvard University.
[50] Weisbrod, B.A., and Arrow, F.B.K. 1998. To profit or not to profit the commercial transformation of the nonprofit sector, Cambridge University Press.
[51] Williamson, O.E. 1964. The economics of discretionary behavior: managerial objectives in a theory of the firm, Carnegie Institute of Technology.
[52] Wyckoff, P.G. 1990. The simple analytics of slack-maximizing bureaucracy, Public Choice, 67(1): 35 – 47.
[2] Alchian, A.A., and Demsetz, H. 1972. Production, information costs, and economic organization. The American Economic Review, 62(5): 777 – 795.
[3] Alesina, A., and Tabellini, G. 2007. Bureaucrats or politicians? Part I: A single policy task. The American Economic Review, 97(1): 169 – 179.
[4] Alesina, A., and Tabellini, G. 2008. Bureaucrats or politicians? Part II: Multiple policy tasks. Journal of Public Economics, 92(3): 426 – 447.
[5] Aucoin, P. 1995. The new public management: Canada in comparative perspective. Cambridge University Press.
[6] Bacchiega, A. and Borzaga, C. 2003. The economics of the third sector. The Study of the Nonprofit Enterprise. Springer, pp. 27 – 48.
[7] Ben-Ner, A. 2002. The Shifting Boundaries of the Mixed Economy and the Future of the Non-profit Sector, Annals of Public and Cooperative Economics, Vol. 73(1): 5 – 40, March 2002. Available at: SSRN: http://ssrn.com/abstract313236
[8] Ben-Ner, A. 2006. For-profit, state, and non-profit: how to cut the pie among the three sectors. Jean-Ph. Touffut, Cheltenham, pp. 40 – 67.
[9] Besley, T. 2011. Principled agents?: The political economy of good government. OUP Catalogue.
[10] Besley, T. and Ghatak, M. 2005. Incentives, risk and accountability in organizations. Cambridge University Press.
[11] Brennan, G. and Buchanan, J.M. 1980. The power to tax: Analytic foundations of a fiscal constitution. Cambridge University Press.
[12] Buchanan, J.M. and Tullock, G. 1965. The calculus of consent: Logical foundations of constitutional democracy. University of Michigan Press.
[13] Burgess, S. and Ratto, M. 2003. The role of incentives in the public sector: issues and evidence, Oxford Review of Economic Policy, 19(2), pp. 285-300.
[14] Chong A., La Porta R., Lopez-de-Silanes F. and Shleifer A. 2012. Letter Grading Government Efficiency, NBER Working Paper No. 18268.
[15] Chote, R., Emmerson, C. and Simpson, H. 2003. Measuring public sector efficiency, 190327429X, 9781903274293, London: Institute for Fiscal Studies.
[16] Coase, R.H. 1937. The nature of the firm, Economica, 4 (16): 386 – 405.
[17] Davis, M.L. and Hayes, K. 1993. The demand for good government, The Review of Economics and Statistics, 75(1): 148 – 152.
[18] De Alessi, L. 1969, Implications of property rights for government in- vestment choices. The American Economic Review, 59(1): 13-24.
[19] Dixit, A. 2002, Incentives and organizations in the public sector: An interpretative review. Journal of Human Resources, 37(4): 696-727.
[20] Dollery, B. and Hamburger, P. 1995. The Dunleavy and Niskanen Models of Bureaucracy: The Case of the Australian Federal Budget Sector, 1982-92. Department of Economics, University of New England.
[21] Downs, A. 1965. A theory of bureaucracy, The American Economic Review, 55(1/2): 439 – 446.
[22] Duncombe, W., Miner, J., and Ruggiero, J. 1997. Empirical evaluation of bureaucratic models of inefficiency. Public Choice, 93(1-2): 1 – 18.
[23] Dunleavy, P. 1991. Democracy, Bureaucracy and Public Choice (Hemel Hempstead: Harvester Wheatsheaf). Also: (Englewood Cliffs, NJ: Prentice-Hall, 1992).
[24] Emrouznejad, Ali. 2000. The assessment of dynamic efficiency of decision making units using data envelopment analysis. PhD thesis, University of Warwick.
[25] Erkoc, T.E. 2011a. Non-Profit Universities and the Challenges of Public Higher Education in 21st Century: The Case of Turkey. CEBA 2011 Conference Proceedings.
[26] Erkoc, T.E. 2011b. Mapping out Economics of Non-Profit Sector in Turkish Context, European Journal of Economic and Political Studies, 4(2): 33 – 48.
[27] Grosskopf, S. and Hayes, K.J. 1993. Local public sector bureaucrats and their input choices, Journal of Urban Economics, 33: 151-166, doi:10.1006/juec.1993.1011.
[28] Hulme, D. and Edwards, M. 1997. NGOs, states and donors: too close for comfort? Macmillan London.
[29] Institute for Fiscal Studies. 2002. The IFS Green Budget: January 2002, Chapter 8: Measuring public sector efficiency, Commentary no. 87, IFS, London
[30] James, E. 1990. ‘Economic Theory of the Nonprofit Sector: A Comparative Perspective’. In: Anheier, H.K. and Seibel, W. Eds. The Third Sector: Comparative Studies of Nonprofit Organizations, pp. 21-29. Berlin, New York: De Gruyter.
[31] Leibenstein, H. 1966, ‘Allocative Efficiency’ vs. ‘X-efficiency’, American Economic Review, (56)3: 392 – 415.
[32] Madden, G., Savage, S., and Kemp, S. 1997. Measuring public sector efficiency: A study of the Economics Department at Australian universities, Education Economics 5(2): 153 – 168
[33] McNutt, P.A. 2002. The economics of public choice, Edward Elgar Publishing.
[34] Migue, J., and Belanger, G. 1974. Toward a General Theory of Managerial Discretion. Public Choice, 17(27): 29.
[35] Mises L.E. 1935. Economic Calculation in the Socialist Commonwealth, available at: http://mises.org/pdf/econcalc.pdf. 1920, reprinted in Hayek Mueller, D.C. 1989. Public choice II, Cambridge Surveys of Economic Literature.
[36] Musgrave, R. A., and Musgrave P.B. 1989. Public finance in theory and practice. 5th Edn. New York, McGraw-Hill.
[37] Niskanen, W.A. 1968. The peculiar economics of bureaucracy, The American Economic Review, 58(2): 293 – 305.
[38] Niskanen, W.A. 1971. ‘Bureaucracy and representative government’. In: Okun, A.M. 1975. Equality and efficiency: The big trade off. Brookings Institution Press.
[39] Panzar, J.C., and Willig, R.D. 1981. Economies of scope. The American Economic Review, 71(2): 268 – 272.
[40] Pedraja-Chaparro, F., Salinas-Jimenez, J., and Smith, P. 2005. Assessing public sector efficiency: Issues and methodologies, available at: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2018855.
[41] Pigou, A. 1920. The Economics of Welfare, London: Macmillan and Co..
[42] Rogoff K. 1985. The optimal degree of commitment to an intermediate monetary target. The Quarterly Journal of Economics, 100(4): 1169 – 1189.
[43] Rosanvallon, P. 2000. The new social question: rethinking the welfare state, Princeton University Press.
[44] Schultz, C. 2003. Information, polarization and delegation in democracy, Economic Policy Research Unit, Institute of Economics, University of Copenhagen.
[45] Stone, M. 2002. How not to measure the efficiency of public services (and how one might). Journal of the Royal Statistical Society: Series A (Statistics in Society), 165(3): 405 – 434.
[46] Tullock, G. 1965. The politics of bureaucracy. 1st edn. Michigan: Public Affairs Press.
[47] Tullock, G. 1997. Economics of income redistribution, Kluwer Academic Publishers Boston.
[48] Weber, M. 1947. Legitimate authority and bureaucracy, Organization theory, Penguin Books, London.
[49] Weisbrod, B.A. 1988. The nonprot economy. Cambridge MA., Harvard University.
[50] Weisbrod, B.A., and Arrow, F.B.K. 1998. To profit or not to profit the commercial transformation of the nonprofit sector, Cambridge University Press.
[51] Williamson, O.E. 1964. The economics of discretionary behavior: managerial objectives in a theory of the firm, Carnegie Institute of Technology.
[52] Wyckoff, P.G. 1990. The simple analytics of slack-maximizing bureaucracy, Public Choice, 67(1): 35 – 47.
Published
2016-11-24
How to Cite
ERKOC, Taptuk Emre.
Efficiency of Public Sector Organizations: Perspectives from Theories of Bureaucracy.
Journal of Advanced Research in Law and Economics, [S.l.], v. 4, n. 2, p. 101-111, nov. 2016.
ISSN 2068-696X.
Available at: <https://journals.aserspublishing.eu/jarle/article/view/470>. Date accessed: 03 may 2024.
Section
Journal of Advanced Research in Law and Economics
Keywords
efficiency; government output; public sector organizations; bureaucracy
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