An Agency Perspective on the Costs and Benefits of Privatization
AbstractThis paper proposes a unified theoretical framework to discuss the costs and benefits of privatization using the recent advances of Incentive Theory. I begin by presenting a simple model in which the State (the principal) delegates a task (e.g., the production of a public good) to the private sector (the agent). I give and discuss conditions for the “Irrelevance Theorem” due to Sappington and Stiglitz [Sappington, D., & Stiglitz, J. (1987) Journal of Policy Analysis and Management, 6, 567–582] to hold under complete contracting. I then show how various contract incompletenesses can make either public or private ownership optimal. Finally, I provide critical assessments of these results. Copyright Springer Science+Business Media, LLC 2006
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Bibliographic InfoArticle provided by Springer in its journal Journal of Regulatory Economics.
Volume (Year): 30 (2006)
Issue (Month): 1 (07)
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Web page: http://www.springerlink.com/link.asp?id=100298
Privatization; Regulation; Agency Costs; Incentives; L51;
Find related papers by JEL classification:
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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