Bureaucrats at sea: a budget catch model

Abstract:

We develop a model of bureaucratic budget catching, where bureaucracies compete for resources just like fishermen. Considering taxpayers' money a free access resource in the absence of tight fiscal control (passive sponsors), bureaucratic self-interest may induce excessive lobbying behaviour even from the perspective of the bureaucrats themselves. Our contribution is to extend the original Niskanen (1971) model by suggesting that bureaucrats will expend resources on lobbying rather than provide public goods, thus rendering the bureaus more inefficient. Such decreases in public good provision affect production in society negatively in the next period, leaving fewer resources for the total group of bureaucrats. One possible empirical implication could be bureaucratic lobbying within the EU due to the institutional stronghold of the Commission. Arguably, the weak institutional position of the European Parliament probably contributed to the observable priority of public goods provision. However, rigorous empirical investigations are needed in future to verify or reject our theoretical claims.