Internal Monopolies and Downsizing

The economic model we use inside bureaucratic organizations relies on the central allocation of resources, monopolies of supply, and cost plus pricing. Internal supply and demand has no impact on the functioning of the system. The majority of units in almost any bureaucracy consists of those that service other organizational units. For example, accounting, legal, personnel, finance, research and development, and purchasing all provide services to other units. Almost all of the servicing units become bureaucratic monopolies because the units that use them have no choice of alternative sources.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.