A Principal-agent Theory of the Public Economy and Its Applications to China
AbstractThis paper is intended to model the principal-agent relationship and its associated monitoring-incentive problems of the public economy. The basic findings are: (1) the degree of publicness and the size of the public economy matter: the monitoring effort of the original principals and the work effort of the ultimate agents decrease with the degree of publicness and the size of the public economy; (2) a corrupt public economy can be a Pareto-improvement over the non-corrupt public economy. The first finding sheds some light upon performance comparison between different public economies (such as between Singapore and China). The second finding explains why all socialist economies are corrupt ones. The paper applies the above results particularly to the Chinese economy. Copyright Kluwer Academic Publishers 1998
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Bibliographic InfoArticle provided by Springer in its journal Economics of Planning.
Volume (Year): 31 (1998)
Issue (Month): 2 (May)
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Web page: http://www.springerlink.com/link.asp?id=113294
Chinese economy; corruption; hierarchy; principal-agent theory; public ownership;
Other versions of this item:
- Zhang, Weiying, 1998. " A Principal-Agent Theory of the Public Economy and Its Applications to China," Economic Change and Restructuring, Springer, vol. 31(2-3), pages 231-51.
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"The Costs and Benefits of Ownership: A Theory of Vertical and Lateral Integration,"
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