Institutional Economics of Public Firms and Administrations

The German public sector is confronted with drastically increasing household deficits. Yet, a coherent concept of reorganizing public enterprises and administrations does not seem to be being applied, At the same time, economic models often appear too abstract or too complicated to be applied by practicioners. Some general guidelines must therefore be developed that are in line with economic reasoning and that can offer orientation for concrete applications. In this article, we develop such a set of rules which is derived from the New Institutional Economics. (JEL: H 40, M21, D 23)