Contemporary Microeconomic Foundations for the Structure and Management of the Public Sector

Lewis Evans, Graeme Guthrie and Neil Quigley ()
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Neil Quigley: The Treasury, https://treasury.govt.nz

No 12/01, Treasury Working Paper Series from New Zealand Treasury

Abstract: The new public management of the 1980s was based in part on a range of important new insights about the role of transaction and agency costs arising from contractual incompleteness in defining the boundaries of the firm and the governance relationships within it. In this paper, we consider the literature of the last 25 years which extends our understanding of allocations of ownership rights and the boundaries of the firm as responses to contractual incompleteness. From this perspective, ownership represents an allocation of control rights to those with the potential to make the most important (value-enhancing) relationship-specific investments. We provide an outline of this modern approach to contractual incompleteness, illustrate its application to a range of issues in public and private ownership, investment, governance and decision-making, and provide suggestions about the impact that this approach might have on the scope, structure and management of the public sector in the 21st century.

Keywords: Incomplete contracts; investment decision-making; public ownership, management and governance (search for similar items in EconPapers)
JEL-codes: G31 H40 L20 L33 (search for similar items in EconPapers)
Pages: 77
Date: 2012-05
New Economics Papers: this item is included in nep-his
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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