Bureaucracy and Efficiency (original) (raw)
Rising economic inquiry on the provision of goods and services by public institutions sparked an investigative research on the efficient allocation of resources within public sector organizations (Duncombe et al. 1997; Pedraja-Chaparro et al. 2005). Whereas neoclassical assumptions on the theory of firm put forward by Coase (1937) and Alchian and Demsetz (1972) assume that a firm is always expected to operate at the efficient production frontier, unpredicted divergences from the neoclassical firm postulations attracted attentions of researchers working not only on the private firms but also on the public sector organizations (Lewis 2004; Bloom and Van Reenen 2007). In this section, the reasons behind the deviance of public sector organizations from the efficient frontier are scrutinized on the basis of the discussions around the economic theory of bureaucracy. The outline of this section is as follows: part II explores the theoretical framework for the efficiency in the public sector organizations, part III demonstrates the bureaucracy component of efficiency in the public sector, and part IV concludes.
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