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Government Organization and Power

Author

Listed:
  • Stephen P. A. Brown

    (Research Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas, TX 75265-5906.)

  • Jason L. Saving

    (Research Department, Federal Reserve Bank of Dallas, P.O. Box 655906, Dallas, TX 75265-5906.)

Abstract

We develop a theoretical framework to examine how government organization affects its power and size. The framework abstracts from distortions that arise from the means of government finance and separates government power into two dimensions--pure coercive power and pure pricing power. A government can exert its coercive power to shift the demand for its services outward and grow too large. It can simultaneously exert its pricing power to restrict output along a given demand curve to earn rents. Consequently, neither size nor rents alone are reliable indicators of the extent to which government provision of services is nonoptimal. Copyright 2002, Oxford University Press.

Suggested Citation

  • Stephen P. A. Brown & Jason L. Saving, 2002. "Government Organization and Power," Economic Inquiry, Western Economic Association International, vol. 40(3), pages 439-449, July.
    • Handle: RePEc:oup:ecinqu:v:40:y:2002:i:3:p:439-449
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