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Abstract

An important and unresolved issue central to the study of government performance is how the actions of managers and the nature of organizations affect the cost of public services. This paper presents an empirical analysis of fire departments that estimates the influence of managerial choices on per capita spending within a simultaneous public production system. It does so by refining a theoretical cost model from the field of public management to include fundamental dimensions of government organizations and administration. Two-stage least squares regression analysis is then employed to examine the fire protection case. The results of the analysis substantiate the intuition that managerial practices and decisions influence the cost of a public service. They show that the cost of fire protection depends significantly on the outcomes of a department's fire prevention and suppression activities, some key aspects of a department's management practices, the configuration of its workforce and equipment, its legal structure, and factors in its external environment. © 2004 by the Association for Public Policy Analysis and Management.