Diseconomies of scale in government

Robin Hanson highlights an interesting study that hints with a fact-based analysis that governmental bodies get markedly less efficient as they get bigger:
Differences across public bodies are correlated with institutional characteristics rather than geography or size. Semi-autonomous bodies (universities and health authorities) pay the lowest prices. Compared to these, the average town government pays 13% more. The difference increases further for regional governments (21%), social security institutions (22%), while the average ministry tops the list with 40% higher prices...
This was in Italy, and incidentally, over 80% of the gap was found (not sure how) to stem from inefficiency, rather than corruption.

This is another bullet for those who argue that big state-run companies (e.g. NOCs) can never be as efficient as their private sector counterparts (but they had a lot of bullets already).

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