Bureaucracy in the conception of William A. Niskanen

The paper explains the theory of bureaucracy developed by William A. Niskanen. While sociologist Max Weber's analysis treats the bureaucrats as "eunuchs" or automatic machines creating the public well-being, Niskanen tries to apply standard neo-classical economic models to explain the behaviour bureaucracy as a whole. On this background he concludes that the bureaucracy will concentrate on bargaining process with the sponsor and not on improving the quality of its services. This is a simple explanation why the bureau provides systematically worse products and services to its customers than the standard firm operating on the market.