Public Economy Organization and Service Delivery

Abstract

"Decision makers in the Detroit area are faced with the consideration of changing the organization of governmental units as one means of increasing both the efficiency and equity of urban services delivery. However, a key question is whether a decrease (or an increase) in governmental fragmentation will affect financial capability to deliver equitable and efficient urban services.

"The Question cannot be answered without a well-developed and empirically based theory of institutional analysis and design. For years, conventional theories have been based on untested hypothesis about the relationship between the size and fragmentation of local governmental units on the one hand, the efficient and equitable delivery of urban services on the other. This has been challenged in the past twenty years by a growing number of economists and political scientists who have made considerable advances both theoretically and empirically. Their work has not yet produced a completed, accepted, and empirically validated theory of institutional analysis and design. The basic elements have, however, been worked out, and considerable empirical investigation supports hypothesis derived form this theoretical tradition. In this paper we will first provide a basic overview of this developing theory of institutional analysis. Any theory has its own language, and to understand it, one must first understand the basic terms. Thus, we shall first define and discuss some elemental concepts that are essential for understanding the approach. Then we will examine some opportunities and problems of complex structures, and lastly, examine some implication of this approach for the Southeastern Michigan area."