The domain of administrative law and economics

The use of economics to understand administrative law may not be as wide­spread as in other areas of legal doctrine and practice. Public behaviours are none the less unambiguously susceptible to economic investigation.

The first one deals with both the efficiency and the control of administra­tion, in a given constitutional framework. Two levels of objectives can be set therein. On the one hand, coherence of administrative behaviours and actions must be assured with regard to the goals of the state and the protection of private rights. The prominent feature is rent seeking. On the other hand, internal control is necessary at the level of the administrative agencies them­selves. Bureaucratic behaviours must be contained by proper incentive mechanisms. This public choice perspective amounts to an evaluation of the outcomes of the behaviour of the administration, and can be summarized by the question: how to judge the actions of the state?

In this chapter, we shall not deal with this issue which, as is exemplified by the growing public choice literature dedicated to it, clearly requires a distinc­tive (notwithstanding inevitable overlap) treatment. This entry rather belongs to the second type of approach which considers the general constitutional framework as endogenous (Buchanan, 1990; Cooter, 2000). From this consti­tutional political economy perspective, the focus is on the procedures leading to the outcomes that are analysed by public choice theory. Therefore, the discussion will not address problems of rent seeking as such but only in so far as they are embodied in a constitutional framework.

In this respect, the principal-agent problem proves insightful. The princi­pal would delegate the right to judge the state. The agent would be induced to take the best actions, in order to fulfil his/her commitment. We shall first focus on two basic questions: who is the principal and who is the agent? We shall then consider the nature of the incentive mechanism. The various insti­tutional answers to these questions provide the many ways of dealing with the power of the state.

The subsequent discussion will focus on the following problems. First, strategic behaviours of the state will be expressed as a paradox of govern­ment, administrative law being its translation in legal terms. Second, the right to judge the state will be analysed as an agency problem and the discussion will focus on the nature of the principal and the agent. Third, the debate will turn on the competition for principalship and on the way in which the agent is controlled. Finally, concluding comments will discuss the role of the consti­tution as a framework for that agency relation.