Efficiency of the institution of public authority: a conceptual analysis in the context of the Law&Economics methodology

Abstract

The article presents a conceptual analysis of the efficiency of the institution of public authority in the context of contemporary global challenges. Drawing on the institutional theory of D. North, the institution of public authority is proposed to be understood as the “rules of the game,” which may be both formal and informal. It is argued that traditional approaches to understanding efficiency, which are focused primarily on quantitative indicators of governmental performance, are insufficient for a comprehensive characterization of this phenomenon. The efficiency of the institution of public authority is defined as the capacity of formal and informal rules to ensure predictability and stability of social interactions, and to determine the structure of incentives and transaction costs. Efficiency in this sense presupposes not only the effectiveness of managerial decisions but also their ability to guarantee stability, public trust, and long-term social welfare.

The multidimensional nature of the concept of efficiency is revealed, encompassing economic, social, political, and institutional-legal dimensions. It is determined that a comprehensive model of efficiency integrates resource-based, functional, social, and dynamic-institutional approaches, which allow for consideration of both the rational use of resources and the capacity of authority to adapt to dynamic changes. The methodology of Law&Economics is highlighted as a productive tool for assessing the efficiency of the institution of public authority, as it combines legal and economic perspectives. It enables the analysis of legal norms and regulatory decisions in terms of their real consequences for social resources, costs, and benefits, thereby ensuring transparency, predictability, and effectiveness of public policy. The article concludes by substantiating the necessity of introducing the interdisciplinary approach of Law&Economics into practice, which will contribute to strengthening public trust in government, enhancing effective public administration, and fostering sustainable development in Ukraine