ABSTRACT
This chapter explores the behavior of a bureau, building on the instrumental constructs for an elementary bureau. The basic model is thus a one-period model of a "pure," single-service bureau which is a competitive purchaser of factors. At this stage, the bureau is considered to be a monopoly supplier of the service, but the sponsor is assumed not to exercise its potential monopoly power as a single buyer of the service, for either lack of incentive or opportunity. The analysis of bureaus that are discriminating monopsonists leads to the following behavioral hypothesis: some bureaus, specifically those that operate in the budget-constrained region and face increasing prices for pecific factors, may exercise factor price discrimination. The observed characteristic that bureaus are large organizations turns out to be a derivative characteristic of the bureaucratic form of organization. This is just the opposite from the inference drawn by sociologists that the bureaucratic form of organization is a derivative characteristic of large organizations.
