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Preventing Collusion Through Discretion

Author

Listed:
  • Leonardo Felli

Abstract

Large public bureaucracies are usually less efficient than modern private corporations. This paper explains how the degree of discretionary power might account for this difference in efficiency. In fact, increasing the discretionary power of the intermediate layers of an organization can enhance productivity by preventing collusion between middle managers and line workers; provided that collusion has a negative effect on the organization's surplus and takes place in conditions of asymmetric information

Suggested Citation

  • Leonardo Felli, 1996. "Preventing Collusion Through Discretion," STICERD - Theoretical Economics Paper Series /1996/303, Suntory and Toyota International Centres for Economics and Related Disciplines, LSE.
    • Handle: RePEc:cep:stitep:/1996/303
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    Citations

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    Cited by:

    1. Axel Gautier & Dimitri Paolini, 2007. "Delegation and Information Revelation," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 163(4), pages 574-597, December.
    2. Celik, Gorkem, 2009. "Mechanism design with collusive supervision," Journal of Economic Theory, Elsevier, vol. 144(1), pages 69-95, January.
    3. Barlo, Mehmet & Ayca, Ozdogan, 2012. "Team beats collusion," MPRA Paper 37449, University Library of Munich, Germany.
    4. Walter Novaes & Luigi Zingales, 2004. "Bureaucracy as a Mechanism to Generate Information," RAND Journal of Economics, The RAND Corporation, vol. 35(2), pages 245-259, Summer.
    5. Mehmet Barlo & Ayça Özdoğan, 2013. "The Optimality of Team Contracts," Games, MDPI, vol. 4(4), pages 1-20, November.
    6. Rafael Hortala‐Vallve & Miguel Sanchez Villalba, 2010. "Internalizing Team Production Externalities through Delegation: The British Passenger Rail Sector as an Example," Economica, London School of Economics and Political Science, vol. 77(308), pages 785-792, October.
    7. Leonardo Felli & J. Miguel Villas-Boas, 1988. ""Friendships" in Vertical Relations," Boston College Working Papers in Economics 204, Boston College Department of Economics.
    8. Peter Howitt & Philippe Aghion, 1997. "Ajustement macroéconomique aux technologies multi-usages," L'Actualité Economique, Société Canadienne de Science Economique, vol. 73(4), pages 575-593.

    More about this item

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy Formulation and Implementation
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness

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