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Productivity Improvements in Public Organisations

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  • Hans Gersbach
  • Marten Keil

Abstract

In this article we examine the scope a principal in a public organisation has for motivating agents for productivity improvements where standard stick and carrot incentives cannot be used. The principal's only incentive device is a reallocation of budgets and tasks across agents depending on the extent of productivity improvements revealed by each agent. We first show that as long as agents do not collude, the principal can use rotation and tournament schemes to eliminate all slack in the organisation. Second, to break collusion between agents, the principal must use discriminatory tournament schemes. In some cases, however, there is no incentive scheme that can overcome collusion. Copyright 2005 Royal Economic Society.

Suggested Citation

  • Hans Gersbach & Marten Keil, 2005. "Productivity Improvements in Public Organisations," Economic Journal, Royal Economic Society, vol. 115(505), pages 671-688, July.
  • Handle: RePEc:ecj:econjl:v:115:y:2005:i:505:p:671-688
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    File URL: http://www.blackwell-synergy.com/doi/abs/10.1111/j.1468-0297.2005.01014.x
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    Cited by:

    1. Hahn, Volker, 2011. "Sequential aggregation of verifiable information," Journal of Public Economics, Elsevier, vol. 95(11), pages 1447-1454.
    2. Rainer Bartel, 2007. "Der öffentliche Sektor in der Defensive," Wirtschaft und Gesellschaft - WuG, Kammer für Arbeiter und Angestellte für Wien, Abteilung Wirtschaftswissenschaft und Statistik, vol. 33(2), pages 199-230.

    More about this item

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • L31 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Nonprofit Institutions; NGOs; Social Entrepreneurship
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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