ABSTRACT

A bureau's environment is defined by its relations with three groups: the collective organization which provides the bureau's recurring appropriation or grant, the suppliers of labor and material factors of production, and, in some cases, the customers for those services that are sold at a per-unit rate. In the jargon of economics, the relation between the bureau and its sponsor is that of a "bilateral monopoly." The bureau's characteristic "package" offer of a promised output for a budget has important implications for the behavior of bureaus: under many conditions it gives a bureau the same type of bargaining power as a profit-seeking monopoly that discriminates among customers or that presents the market with an all-or-nothing choice. The primary reason for the differential bargaining power of a monopoly bureau is the sponsor's lack of a significant alternative and its unwillingness to forego the services supplied by the bureau.