Productivity Improvements in Public Organizations

Hans Gersbach and Marten Keil

No 4469, CEPR Discussion Papers from Centre for Economic Policy Research

Abstract: In this Paper we examine the possibilities a principal in a public organization has to motivate agents for productivity improvements where standard stick and carrot incentives cannot be used. The principal?s only incentive device is a reallocation of budgets and tasks across agents depending on the extent of productivity improvements revealed by each agent. We first show that as long as agents do not collude, the principal can use rotation and tournament schemes to eliminate all slack in the organization. Second, to break collusion between agents, the principal must use discriminatory tournament schemes. In some cases, however, there does not exist an incentive scheme to overcome collusion.

Keywords: Public organizations; Incentive schemes; Tournament and rotation schemes; Collusion (search for similar items in EconPapers)
JEL-codes: D82 L31 M12 (search for similar items in EconPapers)
Date: 2004-07
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Journal Article: Productivity Improvements in Public Organisations (2005)
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