The Efficient Public Provision of Commodities: Transaction Cost, Bounded Rationality and Other Considerations

Clement Tisdell

No 90524, Economic Theory, Applications and Issues Working Papers from University of Queensland, School of Economics

Abstract: After briefly reviewing recent economic theories about the economic welfare consequences of public provision of private commodities, this article examines the cost efficient supply of publicly provided commodities. In the light of the presence of transaction costs and bounded rationality, and consequences for the competence of public bodies, it considers whether the following are cost effective: (1) increased out-sourcing of government funded work and supplies using market and competitive mechanisms; (2) greater contestability of employment in the public sector; (3) more widespread imposition of user charges for publicly supplied commodities; and (4) the increased use of performance budgeting and accounting in the public sector. These measures are often favoured by proponents of structural adjustment policies as means to increase the economic efficiency of the public sector. However, it is argued here that such measures can potentially reduce the economic efficiency of the public sector rather than increase it.

Keywords: Public; Economics (search for similar items in EconPapers)
Pages: 23
Date: 2003-04
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Citations: View citations in EconPapers (41)

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Working Paper: Efficient Public Provision of Commodities: Transaction Costs, Bounded Rationality and Other Considerations (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:ags:uqseet:90524

DOI: 10.22004/ag.econ.90524

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