INDUSTRIAL STRUCTURE AND MONOPOLY POWER IN THE FEDERAL BUREAUCRACY: AN EMPIRICAL ANALYSIS

Abstract

Predictions of various models of public sector supply rely on the assumption of bureau monopoly power. This assumption is tested first by measuring industrial structure of the federal public sector using the concentration ratio and Herfindahl index, and second by examining the relationship between the resulting estimates and bureau monopoly power. The findings indicate that monopoly structure of the federal bureaucracy is more limited than is generally assumed. Interpretations on the basis of traditional industrial organization theory and contestable market theory suggest that bureau monopoly power is questionable and may not be the source of observed inefficiencies in bureau supply.