Preventing Collusion Through Discretion

Leonardo Felli

STICERD - Theoretical Economics Paper Series from Suntory and Toyota International Centres for Economics and Related Disciplines, LSE

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

Date: 1996-01
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Working Paper: Preventing Collusion through Discretion (2011)
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Persistent link: https://EconPapers.repec.org/RePEc:cep:stitep:/1996/303

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