IDEAS home Printed from https://ideas.repec.org/p/mil/wpdepa/2000-03.html
   My bibliography  Save this paper

Endogenous Institutions in Bureaucratic Compliance Games

Author

Listed:
  • Michele Santoni
  • Silvia Fedeli

Abstract

We consider a set-up where two governments have either conflicting or matching preferences on the provision of differentiated (local) goods supplied by a common monopoly bureau. We develop a two-stage game. At stage-1, the two governments decide whether or not to merge into a single institution. At stage-2, all players simultaneously and independently take their decisions in terms of production and rents, with perfect knowledge of the other players' strategies. We solve the subgame perfect Nash equilibrium of this game, and show that, if the bureau immediately updatesits objective function to institutional changes, then the governments always prefer merging. However, if there is an initial bureaucratic inertia in adjusting the bureau's objective function to the institutional change, then ruling politicians may prefer decentralisation to centralisation, depending on the strategic properties of the compliance game and on their own discounting.

Suggested Citation

  • Michele Santoni & Silvia Fedeli, 2000. "Endogenous Institutions in Bureaucratic Compliance Games," Departmental Working Papers 2000-03, Department of Economics, Management and Quantitative Methods at Università degli Studi di Milano.
    • Handle: RePEc:mil:wpdepa:2000-03
    as

    Download full text from publisher

    File URL: http://wp.demm.unimi.it/files/wp/2000/DEMM-2000_003wp.pdf
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Gary Miller, 1977. "Bureaucratic compliance as a game on the unit square," Public Choice, Springer, vol. 29(1), pages 37-51, March.
    2. Miller, Gary J. & Moe, Terry M., 1983. "Bureaucrats, Legislators, and the Size of Government," American Political Science Review, Cambridge University Press, vol. 77(2), pages 297-322, June.
    3. Horn, Henrik & Wolinsky, Asher, 1988. "Worker Substitutability and Patterns of Unionisation," Economic Journal, Royal Economic Society, vol. 98(391), pages 484-497, June.
    4. Daems, A.J., 1990. "Budgeting the non-profit organization : An agency theoretic approach," Other publications TiSEM 6377191a-f918-4f1e-a71a-3, Tilburg University, School of Economics and Management.
    5. Barbara Spencer, 1979. "Outside Information and the Degree of Monopoly Power of a Public Bureau," Working Paper 361, Economics Department, Queen's University.
    6. Avinash Dixit, 1979. "A Model of Duopoly Suggesting a Theory of Entry Barriers," Bell Journal of Economics, The RAND Corporation, vol. 10(1), pages 20-32, Spring.
    7. Malcomson, James M., 1986. "Some analytics of the laffer curve," Journal of Public Economics, Elsevier, vol. 29(3), pages 263-279, April.
    8. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 85-114.
    9. Buchanan, James M & Lee, Dwight R, 1982. "Politics, Time, and the Laffer Curve," Journal of Political Economy, University of Chicago Press, vol. 90(4), pages 816-819, August.
    10. Henrick Horn & Asher Wolinsky, 1988. "Bilateral Monopolies and Incentives for Merger," RAND Journal of Economics, The RAND Corporation, vol. 19(3), pages 408-419, Autumn.
    11. Chan, Kenneth S. & Mestelman, Stuart, 1988. "Institutions, efficiency and the strategic behaviour of sponsors and bureaus," Journal of Public Economics, Elsevier, vol. 37(1), pages 91-102, October.
    12. Bernheim, B Douglas & Whinston, Michael D, 1986. "Common Agency," Econometrica, Econometric Society, vol. 54(4), pages 923-942, July.
    13. Fedeli, Silvia, 1999. "Competing Bureaus and Politicians: A Compliance Approach to the Diversion of Public Funds," Public Choice, Springer, vol. 100(3-4), pages 253-270, September.
    14. Nirvikar Singh & Xavier Vives, 1984. "Price and Quantity Competition in a Differentiated Duopoly," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 546-554, Winter.
    15. Carlsen, Fredrik & Haugen, Kjetil, 1994. "Markov Perfect Equilibrium in Multi-period Games between Sponsor and Bureau," Public Choice, Springer, vol. 79(3-4), pages 257-280, June.
    16. Breton, Albert & Wintrobe, Ronald, 1975. "The Equilibrium Size of a Budget-maximizing Bureau: A Note on Niskanen's Theory of Bureaucracy," Journal of Political Economy, University of Chicago Press, vol. 83(1), pages 195-207, February.
    17. Niskanen, William A, 1975. "Bureaucrats and Politicians," Journal of Law and Economics, University of Chicago Press, vol. 18(3), pages 617-643, December.
    18. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    19. Daems, A.J., 1990. "Budgeting the non-profit organization : An agency theoretic approach," Research Memorandum FEW 451, Tilburg University, School of Economics and Management.
    20. Moene, Karl O., 1986. "Types of bureaucratic interaction," Journal of Public Economics, Elsevier, vol. 29(3), pages 333-345, April.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Graham Mallard, 2014. "Static Common Agency And Political Influence: An Evaluative Survey," Journal of Economic Surveys, Wiley Blackwell, vol. 28(1), pages 17-35, February.
    2. Silvia Fedeli & Michele Santoni, 2006. "The Government's Choice of Bureaucratic Organisation: An Application to Italian State Museums," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(1), pages 41-72, March.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Samarth Vaidya, 2004. "Bureaucratic Provision: Influencing vs. Lying," Econometric Society 2004 Australasian Meetings 251, Econometric Society.
    2. Samarth Vaidya, 2009. "Influencing The Public And Efficiency In Bureaucratic Provision," Pacific Economic Review, Wiley Blackwell, vol. 14(2), pages 259-274, May.
    3. Elton Beqiraj & Silvia Fedeli & Massimiliano Tancioni, 2019. "Bureaucratic Reshuffling and Efficiency: Do n-Competing Bureaus Determine Inefficient Results?," Mathematics, MDPI, vol. 7(10), pages 1-12, October.
    4. Victor V. Claar, 1998. "An Incentive-Compatibility Approach To the Problem of Monitoring a Bureau," Public Finance Review, , vol. 26(6), pages 599-610, November.
    5. Silvia Fedeli & Leone Leonida & Michele Santoni, 2018. "Bureaucratic institutional design: the case of the Italian NHS," Public Choice, Springer, vol. 177(3), pages 265-285, December.
    6. Breton, Albert, 1995. "Organizational hierarchies and bureaucracies: An integrative essay," European Journal of Political Economy, Elsevier, vol. 11(3), pages 411-440, September.
    7. Ana Rodríguez Alvarez & Javier Suárez-Pandiello, 2003. "Organizaciones burocráticas e ineficiencia X: Una revisión de modelos," Hacienda Pública Española / Review of Public Economics, IEF, vol. 164(1), pages 83-107, march.
    8. Fanti, Luciano, 2013. "Cross-ownership and unions in a Cournot duopoly: When profits reduce with horizontal product differentiation," Japan and the World Economy, Elsevier, vol. 27(C), pages 34-40.
    9. Emanuele Bacchiega & Olivier Bonroy & Emmanuel Petrakis, 2018. "Contract contingency in vertically related markets," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 27(4), pages 772-791, October.
    10. Kai A. Konrad & Sebastian G. Kessing, 2008. "Time Consistency and Bureaucratic Budget Competition," Economic Journal, Royal Economic Society, vol. 118(525), pages 1-15, January.
    11. Filippo Vergara Caffarelli, 2007. "Merge and Compete: Strategic Incentives for Vertical Integration," Rivista di Politica Economica, SIPI Spa, vol. 97(5), pages 203-244, September.
    12. Fanti, Luciano & Meccheri, Nicola, 2014. "Profits and competition under alternative technologies in a unionized duopoly with product differentiation," Research in Economics, Elsevier, vol. 68(2), pages 157-168.
    13. Nicola Meccheri & Luciano Fanti, 2012. "Managerial Delegation Schemes in a Duopoly with Endogenous Production Costs: A Comparison of Sales and Relative Profit Delegation under Centralised Unionisation," Working Paper series 44_12, Rimini Centre for Economic Analysis.
    14. Lars-Erik Borge & Torberg Falch & Per Tovmo, 2008. "Public sector efficiency: the roles of political and budgetary institutions, fiscal capacity, and democratic participation," Public Choice, Springer, vol. 136(3), pages 475-495, September.
    15. Miltiadis Makris, 2006. "Political authority, expertise and government bureaucracies," Public Choice, Springer, vol. 127(3), pages 267-284, June.
    16. Carlsen, Fredrik, 1996. "A note on budget schemes in the public sector," European Journal of Political Economy, Elsevier, vol. 12(1), pages 149-156, April.
    17. Silvia Fedeli & Michele Santoni, 2006. "The Government's Choice of Bureaucratic Organisation: An Application to Italian State Museums," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 30(1), pages 41-72, March.
    18. Rosen Valchev & Antony Davies, 2009. "Transparency, Performance, and Agency Budgets: A Rational Expectations Modeling Approach," Working Papers 2009-004, The George Washington University, Department of Economics, H. O. Stekler Research Program on Forecasting.
    19. Mónica Correa‐López, 2007. "Price and Quantity Competition in a Differentiated Duopoly with Upstream Suppliers," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 16(2), pages 469-505, June.
    20. Mark Toma & Eugenia Toma, 1980. "Bureaucratic responses to tax limitation amendments," Public Choice, Springer, vol. 35(3), pages 333-348, January.

    More about this item

    Keywords

    Bureaucracy; Common agency; Repeated compliance games;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mil:wpdepa:2000-03. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: DEMM Working Papers (email available below). General contact details of provider: https://edirc.repec.org/data/damilit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.