Bureaucratic Choice and Nonoptimal Provision of Public Goods: Theory and Evidence
Local governments' allocation decisions are modeled in the context of a slack maximizing bureaucrat who produces public goods according to a production function that includes both provision and the constituents' socioeconomic characteristics. To gain a better understanding of the determinants of slack, comparative statics and an empirical study of Illinois municipalities are conducted. The indirect output distance function provides efficiency scores upon which the authors regress several variables, representing socioeconomic characteristics, costs, and competition measures. They find that slack or inefficient behavior is associated with richer communities, lower education levels, and a lack of competition for residents among municipalities. Copyright 1998 by Kluwer Academic Publishers
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