Research on Investment Behavior of Central and Local Government as Bureaucratic Organizations

The paper studies the relation between the investment behavior and economics performance of government as bureaucrat organization. It explores the characters of local governments and central government with different power allocations. The leader-follower decision-making of Stacklberg model is established and the case study on Chinese transition is demonstrated to simulate the conclusions of theory. It concludes the neither central government has absolute control power and nor the local government is a weak passive taker. The behavior of each hierarchy are reciprocal and interactive, not an outcome of single activity.