ABSTRACT
This chapter focuses on what might be described as the demand-side of allocative efficiency which, in public management, considers citizen satisfaction with the tax-service package provided by the state. Economic theory suggests that allocative efficiency will be ensured by the interaction of supply and demand. Governments provide public services, redistribute resources and invest in capital in a bid to solve social problems of one form or another and in such a way deliver the outcome of a satisfied, or at least more satisfied, citizenry. The countervailing forces of excess supply driving prices down and scarcity pushing them up should deliver a market clearing price and economically efficient allocation of resources without the need for central planning or intervention. The social scientists solution to the response bias of survey-type research is to study actual behaviour. Equipped with measures of efficiency, governments can make changes in the tax-service package to deliver allocative improvements.
