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Bureaucracy Scale, Social Welfare and Governance Structure
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TitleBureaucracy Scale, Social Welfare and Governance Structure  
AuthorGui Lin, Chen Yufeng and Yin Zhendong  
OrganizationSchool of Economics, Jiangxi University of Finance and Economics;School of Economics, Zhejiang Gongshang University;School of Economics, Shandong University 
Key WordsGovernance Structure; Bureaucracy Scale; Rent Seeking; Power Structure  
AbstractThis paper attempts to analyze how the bureaucratic scale to be decided under three different governance mechanisms, by which social welfare will be influenced. We show that different governance structures adapt to different economic environments. And there is a dilemma under governance by bureaucrats (Bureaucratic Paradox): to encourage bureaucrats pay more efforts to product public goods, more power bureaucrats should be allocated, because bureaucrats’ revenue comes from power they own; but more power more corruption. If the population, differences in social productivity or social productivity increasing, heads will prefer governance by bureaucrats more, which show us an expansion of bureaucracy scale. The higher social productivity is, the higher cost of producers is under governance by producers, which will encourage producers to hire less bureaucrats. And the first best solution can be implemented if social productivity is higher enough. Furthermore, governance by producers is more applicable than other governance mechanisms.  
Serial NumberWP21 
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