How do public agencies respond to budgetary control? A theory of strategic task portfolios in public administration

Abstract How do public agencies manage diverse programs under limited budgets? Resource constraints force agencies to prioritize tasks, requiring strategic decisions about how to allocate resources effectively. In this article, I develop a game-theoretical model that explores how agencies shape and restructure their task portfolios under budgetary constraints. In response to budget reductions, I argue that agencies reallocate resources by prioritizing more efficient tasks for improved performance within their portfolios. To test my theoretical claims, I analyze an original dataset of antitrust cases filed by the US Antitrust Division (AD) from 1970 to 2019. Using compositional analysis, I find systematic associations between budgetary changes and the AD’s litigation portfolios. Specifically, budget cuts are associated with a higher share of antitrust criminal cases—the most efficient type for improving performance metrics—and with relatively lower shares for other case types. This study offers new insight into how public agencies navigate budgetary constraints to achieve their public missions while meeting performance expectations.