Paper #1445

Title:

Organizing public good provision: Lessons from managerial accounting

Authors:

Benito Arruñada and Stephen Eliot Hansen

Date:

September 2014 (Revised: October 2014)

Abstract:

This paper applies ideas and findings from Managerial Accounting to the problem of public good provision. It first links the problems of traditional bureaucracies with those of "discretionary expense centers", which are characterized by poor user and supplier incentives as well as overproduction. It then describes alternative hybrid organizations that delegate authority and provide incentives on some dimensions, while maintaining control on others. Finally, it illustrates the ideas with several cross-country case studies on public registries, illustrating that such hybrids may provide a superior, if imperfect, solution to the problems that governments face when lacking sufficient information to directly control the activities of public goods' providers.

Keywords:

Public Good Provision, Managerial Accounting.

JEL codes:

H40, M48

Area of Research:

Business Economics and Industrial Organization

Published in:

International Review of Law and Economics, 42, 185-91, 2015.

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