"The Cost of Governance, A Research Agenda ",
German Working Papers in Law and Economics:
Printing Tip: Select the option to 'print as image' in the Acrobat print dialog to ensure the article prints as it appears on screen.
There was a time when the enhancement of efficiency and effectiveness of the public sector was mainly achieved through devices of rational planning and decision making. With the arrival of downsizing and privatization as focus of public sector reform, alternative means of providing and operating functions and services came into play. Privatization was the major driving force. But by these new forms of governance the traditional functions of the state borne by market failure did not automatically become obsolete. In the paper it is illustrated that the latter fact leads to possibly unexpected complicated governance structures and that the observation of government obligations leads to a deadweight loss, which makes private governance less attractive than it is broadly believed.