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Xerox University Microfilms 300 North ZoobRoad Ann Arbor, Michigan 48100 f, " ,? I 75-19,449 HOBBIE, Richard Alan, 1945- THE THEORY OF SUPPLY BY BUREAUS: A CRITICAL EVALUATION. ! The Ohio State University, Ph.D., 1975 Political Science, public administration Xerox University Microfilms , Ann Arbor, Michigan 40106 (C) Copyright by Richard Alan Hobble 1975 THIS DISSERTATION HAS BEEN MICROFILMED EXACTLY AS RECEIVED. THE THEORY OF SUPPLY BY BUREAUS: A CRITICAL EVALUATION DISSERTATION Presented in Partial Fulfillment of the Requirements for the Degree Doctor of Philosophy in the Graduate School of The Ohio State University By Richard A. Hobble, B.A., M.A. ★ * ★ * * The Ohio State University 1975 Reading Committee Approved By Sven B. Lundstedt Randall B. Ripley Frederick D. Stocker A dviser Division of Public Administration ACKNOWLEDGMENTS This study culminates a project which I could not have accomplished without the help of several individuals. First, my committee encouraged me to pursue the topic. Both Professors Lundatedt and Ripley gave me opportunities to write seminar papers on Nlskanen's theory, which helped to crystalize many of my ideas. My adviser, Professor Stocker, patiently criticized both papers and the ensuing chapters In this dissertation. I deeply appreciate the time and effort these individuals committed to this study. In addition to my committee, I would like to thank several other people. First, my colleagues at the Center for Human Resource Research, Richard Sines and Damianos Hilsaca Ode, often gave me helpful sugges- tlons. In particular, Dick Sines suggested some mathematical analysis that proved quite fruitful. Second, Grace Franklin at the Mershon Center provided me with some necessary data. Third, Professor Leroy J. Hushak added some very important Insight to the theoretical analysis. Finally, my wife, Barbara, gave me immeasurable support and encourage­ ment throughout the project. Of course, any errors that remain are my own and in no way reflect on those who have helped me complete this endeavor. 11 VITA January 6, 1945 ............................... Born - Cleveland, Ohio 1967 ..................................................... B.A., The Ohio State University, Columbus, Ohio. 1967-1968 ........................... Teaching Assistant, Economics Department, The Ohio State University, Columbus, Ohio 1968-1970 ............................................ U.S. Army, F o rt Knox, Kentucky and The Republic of Viet Nam 1970-1974 ............................................ Graduate Research Associate, The Center for Human Resource Research, The Ohio State University, Columbus, Ohio 1 9 7 1 ..................................................... M.A., The Ohio State University, Columbus, Ohio 1974-1975 .... Research Associate, Hershon Center, The Ohio State University, Columbus, Ohio PUBLICATIONS "Public Employability of Ohio Welfare Recipients," Bulletin of Business Research. Center for Business and Economic Research, The Ohio State University, Vol. XLIX, No. 8, August, 1974, co-author. "Using Labor Market Information for Planning Vocational Education In Ohio," Center for Vocational and Technical Education Monograph, February, 1975, co-author. FIELDS OF STUDY Major Field: Public Administration Studies in Public Finance. Professors Frederick D. Stocker and Arthur D. Lynn Studies in Human Resource Policy. Professors Samuel C. Kelley and Herbert S. Parnes i l l TABLE OF CONTENTS Page ACKNOWLEDGMENTS..................................................................................................... 11 VITA ................................................................................................ I l l LIST OF TABLES........................................... v l LIST OF FIGURES..................................................................................................... v l i Chapter I . INTRODUCTION......................................................................................... 1 A Mathematical Model of Intereat Group Llberallam? Organization of the Study I I . THE RELEVANCE OF NISKANEN'S THEORY TO PUBLIC ADMINISTRATION..................... 8 A Symptom of the Intellectual Crisis A Review of the Relevant Literature The Rise of the Doctrine of Consolidation Policy Relevance I I I . A SUMMARY OF NISKANEN'S ARGUMENT................................ 46 The Model Implications Prescriptions IV . METHODOLOGICAL EVALUATION............................................ 106 Logical Form E valuation Conclusion V. DERIVATION OF AN EMPIRICALLY TESTABLE HYPOTHESIS . 140 Theoretical Derivation Operationalization V I. A RUDIMENTARY TEST OF THE CONSOLIDATION HYPOTHESIS . 155 Four Case Studies Competing Hypotheses Conclusion iv TABLE OF CONTENTS cont'd . Page V II. SUMMARY AND CONCLUSION.......................................................................... 187 APPENDIX A............................................................... 191 B............................................................................................................................. 195 C............................................................................................................................. 198 D............................................................................................................................. 200 BIBLIOGRAPHY.............................................................................................................. 203 v I LIST OF TABLES Table Page 3.1 Equations Needed for A Comparison of Organizational Forms ........ ....................................................................... 64 3*2 Alternative Forms of Economic Organization Facing Same Demand and Cost C o n d itio n s ..................... 65 3*3 Summary of H12 97 4*1 Zero T estability ..........................................................................................116 4*2 Degree of Conformation (DC) . ............................................................... 118 4.3 Formalization of the Theory of Supply by Bureaus .... 121 4.4 Selection of Empirically Testable Implications .................... 136 5.1 C onsolidation Time P e r io d .........................................................................1 5 3 6.1 Real Fiscal Year Growth Rates in Four Federal Agencies' Actual Outlays ..... ........................................ 158 6.2 Statistical Test Summary .........................................................................159 vi LIST OF FIGURES Figure Page 3*1 Equilibrium Output of A Bureau ............................................... 57 3.2 Bureau-Sponsor Exchange E quilibria ...................................... 59 3.3 Basic Graphs for Analysing Organizational Forms .... 68 3.4 Competitive Industry Facing Competitive Factor Prices . 70 3.5 Competitive Industry Facing Monopsonlstlc Factor Prices (Uniform) ............................................................................... 72 3.6 Profit Maximizing Monopoly Facing Uniform Factor P r i c e s ............................................................................................. 74 3*7 Profit Maximizing Monopoly with Discriminating Factor Prices ................................................................................... 75 3.B Budget Maximizing Monopoly Bureau Facing Uniform Factor Prices (Budget-Constrained) ....................................... ' 77 3.9 Budget Maximizing Monopoly Bureau with Discriminating F a c to r P rice s (Demand-Cons t r a i n e d ) ................................ 78 3.10 Competitive Bureaucracy with Monopsonlstlc Factor Prices (Uniform)................................................................
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