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Preventing collusion through discretion

By Leonardo Felli and R. Hortala-Vallve

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 informatio

Topics: HD Industries. Land use. Labor
Publisher: Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Poltical Science
Year: 1996
OAI identifier: oai:eprints.lse.ac.uk:3597
Provided by: LSE Research Online
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