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Information, Incentives, and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises

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  • Shirley, Mary M
  • Xu, Lixin Colin

Abstract

This article analyzes the experience with performance contracts between developing country governments and the managers of their state owned enterprises. It identifies how problems of information asymmetry, incentives, and commitment can lead to shirking. It applies this conceptual framework to a sample of 12 contracts with monopoly state enterprises in six developing countries and finds that all suffer from serious contracting problems and there is no pattern of improved performance that can be attributed to the contracts. Copyright 1998 by Oxford University Press.

Suggested Citation

  • Shirley, Mary M & Xu, Lixin Colin, 1998. "Information, Incentives, and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 14(2), pages 358-378, October.
    • Handle: RePEc:oup:jleorg:v:14:y:1998:i:2:p:358-78
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    1. Nalebuff, Barry J & Stiglitz, Joseph E, 1983. "Information, Competition, and Markets," American Economic Review, American Economic Association, vol. 73(2), pages 278-283, May.
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    6. North, Douglass C. & Weingast, Barry R., 1989. "Constitutions and Commitment: The Evolution of Institutions Governing Public Choice in Seventeenth-Century England," The Journal of Economic History, Cambridge University Press, vol. 49(4), pages 803-832, December.
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