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Competition and Decentralisation in Government Bureaucracies

[journal article]

Halonen-Akatwijuka, Maija; Propper, Carol

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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.
Classification Political Process, Elections, Political Sociology, Political Culture; Social Security
Free Keywords Government provision of services; Decentralisation; Competition
Document language English
Publication Year 2008
Page/Pages p. 903-916
Journal Journal of Economic Behavior & Organization, 67 (2008) 3-4
DOI http://dx.doi.org/10.1016/j.jebo.2007.08.009
Status Postprint; peer reviewed
Licence PEER Licence Agreement (applicable only to documents from PEER project)