Multiple-task common agency with one fully-informed principal: implications for public policy
This paper verifies the robustness of Dixit's claim that common agency problems in the public sector can be solved by restrictions on the incentive schemes that government agencies can develop for the subordinates of other departments. In our model, the outside principal (for instance, an environmental agency) offers side payments to the hierarchical superior of a public servant. As suggested by Dixit, the side payment is based only on the output that is of direct relevance for the outside principal (for instance, environmental quality). The hierarchical superior, however, can impose an enforceable effort allocation. We show that the outside principal will bribe the hierarchical superior to impose a zero effort level in the task that constitutes the core mission of his department, unless there exist both lower and upper limits to the transfers that can be made. Thus, without exogenous restrictions on side payments, common agency will lead to a collapse of the division of labor within government.
To our knowledge, this item is not available for
download. To find whether it is available, there are three
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.
|Date of creation:||Aug 2002|
|Date of revision:|
|Contact details of provider:|| Postal: |
Phone: +32-(0)16-32 67 25
Fax: +32-(0)16-32 67 96
Web page: http://www.econ.kuleuven.be/ew/academic/energmilEmail:
More information through EDIRC
When requesting a correction, please mention this item's handle: RePEc:ete:etewps:ete0206. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Isabelle)The email address of this maintainer does not seem to be valid anymore. Please ask Isabelle to update the entry or send us the correct address
If references are entirely missing, you can add them using this form.