Question

Bureaucracy why are bureaucracies often less efficient than private companies at producing public goods? check all that apply.

Answer 1

Because bureaucracies are legally shielded from market forces, including certain incentives, they may not be driven enough to help the market system achieve efficiency. 

Moreover, just as everyone else, bureaucrats also try to maximize and protect their own interests and welfare as best as they can. Because of this, they may opt to serve their own interests. These interests may or may not be in line with those needed to achieve economic efficiency and thus, may lead to more public spending than desired. 

Lastly, when formulating provisional decisions, bureaucrats usually fail to use cost-benefit analysis, resulting in decisions which may not be for the best in terms of economic efficiency.