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A Theory of Misgovernance
Working paper
Abhijit Banerjee
August 1994 |
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This paper studies the determinants of government performance. The paper identifies tow specific reasons for apparently poor government performance. The first is the lack of coherent objectives within the government. This is captured in the paper in the form of a conflict between a welfare-maximizing government and its bureaucrats who are interested only in their private revenues. The second is the government's involvement in the allocation of goods and services to those who are unable to pay as much for the goods as they would like to I.e. those who are credit constrained.
In the paper we show that the conflict in objectives is important in understanding why governmental allocation processes usually involve a lot of red-tape. More specifically we demonstrate that the amount of red-tape is higher when there is a conflict of objectives within the government than when the government and its agents share the same objective - be it social welfare maximization or private revenue maximization. |
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| Last updated on: 12/19/2006 |
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