ABSTRACT
Public sector reform everywhere broke up the monolithic nature of the public sector. As a result of deconcentration, decentralisation, incorporation, internal markets, quangos and policy networks, the public sector displays a rich variety of governance structures. When social insurance is added to the picture, then complexity increases again with new ideas about workfare state, etc. Can this heterogeneity be captured in terms of one model? Yes, the principal-agent framework from institutional economics and the economics of information amounts to an attempt to do just that.
