Property rights in the public sector

As with theories of the firm, many theories of public sector organiza- tions have been based on property rights, either explicitly or implicitly. These theories tend to examine the concept of authority rather than ownership. Although authority and ownership are not the same, they are related. Whereas ownership implies a legal right of possession,

Property rights and the bureau: the issue of separation of ownership and control

The nature of property rights in the public sector just discussed suggests a separation of ownership and control along the lines of that in the for- profit corporation, with some important differences. Full ownership of a resource includes both residual rights and control rights. The complex structure of the for-profit corporate form of organization

Managerial decision making in the public sector

1. Unbounded rationality Decision behavior of legislators has been modeled by Weingast, Shepsle and Johnsen (1981). Their model assumes utility maximizing legisla- tors and distinguishes political efficiency from economic efficiency by explicitly considering specific political benefit and political cost func- tions. The outcome of their model shows that the politically efficient amount of output exceeds

Property rights in the nonprofit sector

The spectrum of nonprofit organizations incorporate certain character- istics of business (for-profit) organizations and of government (public) organizations, but have their own unique character apart from either of these two. Accordingly, theories of nonprofits derive from multiple fields: economics, political science, history, sociology, and organization theory. Some of the theories from across fields address

Property rights and the nonprofit organization: the issue of separation of ownership and control

The nondistribution constraint is an important part of the legal definition of a nonprofit organization. It is an important economic characteristic as well. This legal requirement, whereby no residual claim may be made by any individual or group associated with the nonprofit organization, is interpreted in economic analyses to define a nonprofit as an

Managerial decision making in nonprofit organizations

1. Unbounded rationality Economic analysis of nonprofit organizations primarily assumes unbounded rationality. That is, the models employ optimization tech- niques that propose a specific objective (such as maximizing revenue, budget, or quality of service) and develop implications for nonprofit outcome (typically output, inputs, cost and/or quality levels). These models generally show that nonprofit organizations

Unbounded rational decision making: neoclassical models of alternative organizational behavior

The neoclassical view of organizations, regardless of organizational form, is essentially one of a production function with no attention to internal organizational structure. To summarize, there is a single focused objec- tive function for the organization as a whole. The decision process is an organizational response to exogenous factors that serve as constraints and

Unbounded rational decision making: managerial models of alternative organizational behavior

Managerial models of organizations are based on the premise that cer- tain assumptions of the neoclassical model do not hold. In particular, transactions costs, which include monitoring costs, are positive. There is separation of ownership and control of resources in the organization and corresponding imperfect agency behavior on the part  of  the  manager. The

Bounded rational decision making and alternative organizational behavior

Limits on information availability and on information processing that give rise to bounded rational behavior exist in all forms of organiza- tions. The limits exist on both sides of the principal–agent relationship. The implications of bounded rationality within the corporate struc- ture of a firm are ambiguous for managers and less so for shareholders.

Property rights and economic regulation

For organizations of supply, economic or rate regulation replaces market pricing. Often economic regulation is imposed under conditions of mar- ket failure where competition is absent or creates inefficiencies, such as in situations of natural monopoly brought about by significant real or pecu- niary economies of scale. This has occurred in certain circumstances for

Property rights and social regulation

Social regulation policy is designed to correct market failures resulting from imperfect information and incomplete property rights in markets such as occur with externalities. Rather than a single policy, social regulation is a set of policies that set standards or requirements which affect the production and/or consumption process, such as nutrition labeling requirements, product

Property rights and managerial response to tax policy

It is well known that tax policies alter the allocation and distribution of resources within the economy. In this section I examine some of the theoretical sources of these effects, specifically, how property rights structures in alternative organizations of supply determine managerial response to tax policies. For this purpose I focus mainly on income,

Property rights and traditional industrial organization theory and policy

Traditional industrial organization theory and policy is based on the neoclassical model of the firm as a pure profit maximizing entity. The model underlying traditional industrial organization policy thus assumes complete and enforceable private rights to all firms, with no agency problems, regardless of the market structure within which the firm operates. The structural

Property rights and multi-sector industrial organization

Consider now the extension of industrial organization analysis beyond the private proprietary sector to include public sector bureaus and non- profit organizations. I first address the issue of the extent to which policies based on the traditional industrial organization model may be applied separately to public sector bureaus and nonprofits. I then con- sider

Variations in for-profit firms

There are a variety of forms of the for-profit firm. These include, of course, the perfect-agent single proprietorship or imperfect agent man- aged corporation, as described earlier. Here I consider the alternative for- profit organizational forms of the general partnership, the labor owned firm, and the consumer cooperative. The profit motive is common to

Variations in public sector bureaus

The discussion of Chapter 6 focused on property rights and decision making in public sector bureaus in the US federal sector. Here I address variations in these organizations first, within the US federal govern- ment and second, across the different levels of US government. Within the  US  federal  government,  public  organizations  provide a variety

Variations in nonprofit organizations

The discussion in Chapter 7 of property rights and managerial decision making in nonprofit organizations focuses on tax exempt nonprofits, primarily the 510(c)3 and 501(c)4 nonprofits in the US, as a generic group. Within this category of nonprofit organizations, however, there is considerable variation in the types of services offered, nonprofit missions, and organizational

Variations in Other organizational forms

In addition to the variations in the structure of firms, public bureaus, and nonprofit organizations just described, there exist organizations which do not fit neatly into any of these organizational categories. These alternative organizational forms derive from contractual rela- tionships across sectors. Their intersectoral nature distinguishes these organizational forms from that of a contractual

Economics, organization theory, and property rights

Consider again the efficiency objective: to maximize net social value from the limited resources available. The economic model of social effi- ciency is based on a society that consists of consumers and producers who engage in individual self-interested (that is, not social) behavior. Each consumer wants the greatest satisfaction for himself or herself and

Economic theory of organizations, property rights, and social value

The concepts of social value and property rights are important compo- nents of the analysis of organizations and managerial decision making. Differences in the approaches taken by economists and organization theorists from other disciplines appear to stem from their respective treatments of these two components. Organization theorists explain organizations as social units. Economists explain