K.U.Leuven, Faculty of Economics and Applied Economics : Department of Economics
CES - Discussion paper series (DPS) 08.15 pages:1-16
We examine how diversification of projects assigned to an agency can enhance efficiency by informing a principal of the agency’s quality. Projects that appear inefficient in isolation may be justified when assigned to the same agency. Assigning different tasks to different special purpose governments, though allowing for technical efficiency in the management of each project, may nevertheless reduce overall efficiency.