Integrating Economic and Organization Theory
Edited by Anna Grandori
Chapter 29: Public economic organisation
The organisation of the public household, delivering a set of public services in a wide sense, is based upon a fundamental requirement for quid pro quo: the money provided the government(s) in the form of taxes and charges must at the end of the day correspond to the allocation of a set of valuable services, both quantitatively and qualitatively. But how is this to be achieved, in both a transparent and an effective way? At the root of the problematic of allocating public services is how to handle various modes of principal– agent interactions, where government can chose between alternative mechanisms: the bureau, incorporated units, ad hoc or statutory agencies, outsourcing, tournaments or auctions, tendering or bidding, public–private partnerships and multi-level governance. The overall trend in organisation change is the move away from hierarchy and formal organisation towards externalisation and networking. Public economic organisation is less the rule of authority, as with the classical Weberian model of the state, than the handling of massive numbers of contracts between government as the principal and a diverse set of agents.
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