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Obtaining information by diversifying projects or why specialization is inefficient

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Listed:
  • Amihai Glazer
  • Stef Proost

Abstract

We examine how diversification of projects assigned to an agency can enhance efficiency by informing a principal of the agency’s quality. Projects that appear inefficient in isolation may be justified when assigned to the same agency. Assigning different tasks to different special purpose governments, though allowing for technical efficiency in the management of each project, may nevertheless reduce overall efficiency.

Suggested Citation

  • Amihai Glazer & Stef Proost, 2008. "Obtaining information by diversifying projects or why specialization is inefficient," Working Papers Department of Economics ces0815, KU Leuven, Faculty of Economics and Business, Department of Economics.
  • Handle: RePEc:ete:ceswps:ces0815
    as

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    File URL: https://lirias.kuleuven.be/bitstream/123456789/183998/1/DPS+0815.pdf
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    References listed on IDEAS

    as
    1. Parkash Chander & Henry Tulkens, 1995. "A core-theoretic solution for the design of cooperative agreements on transfrontier pollution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 2(2), pages 279-293, August.
    2. Wolfgang Buchholz & Alexander Haupt & Wolfgang Peters, 2005. "International Environmental Agreements and Strategic Voting," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(1), pages 175-195, March.
    3. Robert Innes, 2006. "A Theory of Consumer Boycotts under Symmetric Information and Imperfect Competition," Economic Journal, Royal Economic Society, vol. 116(511), pages 355-381, April.
    4. Paul Klemperer, 1995. "Competition when Consumers have Switching Costs: An Overview with Applications to Industrial Organization, Macroeconomics, and International Trade," Review of Economic Studies, Oxford University Press, vol. 62(4), pages 515-539.
    5. Andrei Shleifer, 2004. "Does Competition Destroy Ethical Behavior?," American Economic Review, American Economic Association, vol. 94(2), pages 414-418, May.
    6. Murdoch, James C. & Sandler, Todd & Vijverberg, Wim P. M., 2003. "The participation decision versus the level of participation in an environmental treaty: a spatial probit analysis," Journal of Public Economics, Elsevier, vol. 87(2), pages 337-362, February.
    7. Baron, David P., 2002. "Private Politics and Private Policy: A Theory of Boycotts," Research Papers 1766, Stanford University, Graduate School of Business.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Special purpose governments; Asymmetric information; Bureaucracy; Project evaluation;

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • D83 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Search; Learning; Information and Knowledge; Communication; Belief; Unawareness
    • H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate

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