TAILIEUCHUNG - Microeconomics for MBAs 56

Microeconomics for MBAs 56. The Economic Way of Thinking for Managers. Microeconomics for MBAs develops the economic way of thinking through problems that MBA students will find relevant to their career goals. Maths is kept simple and the theory is illustrated with real-life scenarios | Chapter 16 Public Choice Politics in Government and the Workplace 9 including both city and suburbs could spread the tax burden over all those who benefit from city services. Consolidation can be a mixed blessing however if it reduces competition among governments. A large government restricts the number and variety of alternatives open to citizens and increases the cost of moving to another locale by increasing the geographical size of its jurisdiction. Consolidation in other words can increase government s monopoly power. As long as politicians and government employees pursue only the public interest no harm may be done. In fact the people who run government have interests of their own. So the potential for achieving greater efficiency through consolidation could easily be lost in bureaucratic red tape. Studies of consolidation in government are inconclusive but it seems clear that consolidation proposals should be examined carefully. The Economics of Government Bureaucracy Bureaucracy is not limited to government. Large corporations like General Motors and AT T employ more people than the governments of some nations. They are bigger than the major departments of the federal government although no company of course is as large as the federal government as a whole. Yet corporate bureaucracy tends to work more efficiently than government bureaucracy. The reason may be found in the fact that it pursues one simple objective profit that can be easily measured in dollars and cents. Certainly the reason cannot be that stockholders are better informed than voters. Most stockholders are rationally ignorant or their companies doings for the cost of becoming informed outweighs the benefits. Even in very large corporations however some individuals hold enough stock to make the acquisition of information a rational act. Often such stockholders sit on the company s board of directors where their interest in increasing the value of their own shares makes them good .

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• Society and Business
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