Bureaucratic rent creation: the case of price discrimination in the market for postsecondary education

Hazlett, Peter K.; Reilly, Chandler S.

doi:10.1007/s10602-022-09365-x

Cited by 3 publications

(5 citation statements)

References 45 publications

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“…Private entrepreneurs and bureaucrats operate in different institutions under different incentive structures (See Hazlett and Reilly [43] for a discussion of how entrepreneurial action differs in the marketplace and bureaucracy). Firms seek to maximize profit by producing the most demanded goods and services at the lowest cost.…”

Section: Theoretical Backgroundmentioning

confidence: 99%

Can Markets Improve Recycling Performance? A Cross-Country Regression Analysis and Case Studies

2023

Self Cite

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Can recycling reduce negative externalities created by landfills? Environmentalists argue yes; however, the efficiency of recycling will be institutionally contingent. Entrepreneurs will face less barriers to profit from recycling in countries with more economic freedom. Additionally, recycling conducted by private firms will be more cost-effective and have higher rates of innovation in recycling technology relative to a nationalized industry. The purpose of this study is to test these claims. First, a two-way fixed effects regression model is estimated using panel data from 34 countries over the years 2000 to 2019. Our regression results show that increases in economic freedom have a positive effect on recycling rates, independent of related policy effects. Second, using two brief case studies of the Republic of Korea and Taiwan, we show how the inefficiencies of bureaucratic management suggest that private industry can be a less costly solution to encouraging recycling. The empirical results and case studies strongly suggest that increases in economic freedom can be an important mechanism for increasing recycling rates, and private industry involvement in existing recycling programs can limit unnecessary costs.

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Section: Theoretical Backgroundmentioning

confidence: 99%

Can Markets Improve Recycling Performance? A Cross-Country Regression Analysis and Case Studies

2023

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“…Klein et al (2010) put forth a theory of public entrepreneurship intended to cover the actions of a multitude of political actors including bureaucrats. More recently, Hazlett and Reilly (2022) analyze bureaucratic entrepreneurship specifically and use it to understand the strategies employed by bureaucrats to capture politically appropriated resources. This strand of research is related to the rent-seeking literature [3] but differs in that it attempts to understand how entrepreneurial functions manifest and are influenced by political institutions among political actors rather than assuming the existence of rents and analyzing the incentives those rents create for political actors.…”

Section: Bureaucratic Entrepreneurshipmentioning

confidence: 99%

“…By accounting for bureaucratic interests outside the scope of the budget, we can better understand the opportunities bureaucrats may face to act entrepreneurially both across and between levels of institutions (Bylund and McCaffrey, 2017). For instance, Hazlett and Reilly (2022) consider the ability of bureaucrats to act entrepreneurially through the creation of rents for private parties. They show that by altering regulations which affect the ability of universities to price discriminate, bureaucrats within the Department of Education increased support for bureau activities as seen by increased lobbying activity.…”

Section: Bureaucrats As Evasive Entrepreneursmentioning

confidence: 99%

“…Bureaucrats, like market entrepreneurs, will act in evasive ways to capture benefits when new regulations are introduced that prohibit specific behaviors given pre-existing discretion over the area being regulated and institutional contradictions that can be exploited. This contribution ties the paper to the literature on the effects of institutions on entrepreneurial behavior including the portion of that literature specifically concerned with evasive entrepreneurship (Baumol 1990;Boettke and Piano, 2016;Bylund and McCaffrey, 2017;Coyne et al, 2016;Coyne and Leeson, 2004;Hanoteau and Vial, 2020;Henrekson and Sanandaji, 2011;Strow and Strow, 2018;Thierer, 2020); and the public choice literature (DiLorenzo, 1988;Hazlett and Reilly, 2022;Holcombe, 2002;Klein et al, 2010;Tullock, 1965).…”

Section: Introductionmentioning

confidence: 99%

“…, 2016; Coyne and Leeson, 2004; Elert and Henrekson, 2016; Elert et al. , 2016; Hanoteau and Vial, 2020; Henrekson and Sanandaji, 2011; Strow and Strow, 2018; Thierer, 2020); and the public choice literature (DiLorenzo, 1988; Hazlett and Reilly, 2022; Holcombe, 2002; Klein et al. , 2010; Tullock, 1965).…”

Section: Introductionmentioning

confidence: 99%

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University-Affiliated Research Centers: evasive entrepreneurship within the DOD

Reilly

2022

JEPP

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PurposeThe Department of Defense (DOD) has long partnered with universities and other nonprofit organizations to perform early-stage, military-related research using research centers established under long-term contracts known as Federally Funded Research and Development Centers (FFRDCs). Over the last 25 years, there has been a shift in the type of arrangement used to University Affiliated Research Centers (UARCs) that this paper argues is the result of bureaucrats acting as evasive entrepreneurs in response to changing regulations.Design/methodology/approachExtending the theory of evasive entrepreneurship to bureaucrats, the author shows how regulations increase the cost of bureaucratic action and incentivize the creation of substitute actions to avoid those regulatory costs and capture benefits. Qualitative evidence from DOD documents is used to support the contention that UARCs serve the same function as FFRDCs. Quantitative evidence on the number of FFRDCs and UARCs and their funding illustrates how bureaucrats respond to political restrictions.FindingsBureaucrats have little to no recourse to respond to budgetary cuts or spending ceilings. In the case of FFRDCs, spending ceilings were introduced starting in the 1960s and led to a decline in the number of DOD FFRDCs. Bureaucrats can however strategically evade new regulations by reorganizing transactions justified by existing federal law that contradicts new regulations. Once FFRDCs were federally regulated in 1990 there were strong incentives to create substitute arrangements leading to the creation of UARCs in 1996 that have ultimately replaced FFRDCs as the research center of choice for the DOD.Originality/valueThe article makes three contributions. First, it applies the concept of evasive entrepreneurship to a political context and then use that framework to understand the creation and establishment of the DOD's UARCS. Second, the organizational features and purpose of UARCs are analyzed. Third, the evidence provided shows how regulations resulted in a shift in the DOD's R&D strategy toward working with universities.

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You Work for Us Now: Concentration in University-Performed Defense R&D

Reilly

2024

Defence and Peace Economics

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Bureaucratic rent creation: the case of price discrimination in the market for postsecondary education

Cited by 3 publications

References 45 publications

Can Markets Improve Recycling Performance? A Cross-Country Regression Analysis and Case Studies

Can Markets Improve Recycling Performance? A Cross-Country Regression Analysis and Case Studies

University-Affiliated Research Centers: evasive entrepreneurship within the DOD

You Work for Us Now: Concentration in University-Performed Defense R&D

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