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Corporate Design for Regulability. A Principal-Agent-Supervisor Model

Author

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  • Christoph Engel

    (Max-Planck-Institute for Research on Collective Goods)

Abstract

Corporate actors differ from individuals in one important respect: technically, it may be possible to observe the formation of the corporate will from outside, and to impact on its formation. This feature can be exploited by regulators. One technology is inducing corporate actors to hire an interface actor, representing the regulatory cause at the interior of the firm. Regulators are corporate actors as well. Statutes usually do not fully determine their behaviour. Therefore, firms may induce the regulator to give an interface actor access to the regulatory arena. This interface actor has the task of representing the commercial cause in regulatory decision-making. The paper uses a principal-agent-supervisor model to analyse each of these cases separately, and to demonstrate how the reciprocal nature of the relationship may be exploited.

Suggested Citation

  • Christoph Engel, 2005. "Corporate Design for Regulability. A Principal-Agent-Supervisor Model," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2005_15, Max Planck Institute for Research on Collective Goods.
    • Handle: RePEc:mpg:wpaper:2005_15
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    References listed on IDEAS

    as
    1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    2. Adler, Matthew D & Posner, Eric A, 2000. "Cost-Benefit Analysis: Legal, Economic, and Philosophical Perspectives: Introduction," The Journal of Legal Studies, University of Chicago Press, vol. 29(2), pages 837-842, June.
    3. George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 84(3), pages 488-500.
    Full references (including those not matched with items on IDEAS)

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    Cited by:

    1. Christoph Engel, 2006. "The Difficult Reception of Rigorous Descriptive Social Science in the Law," Discussion Paper Series of the Max Planck Institute for Research on Collective Goods 2006_1, Max Planck Institute for Research on Collective Goods.
    2. Urs Schweizer, 2006. "Corporate Design for Regulability. Comment," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 162(1), pages 130-133, March.
    3. David, Guy & Saynisch, Philip A. & Smith-McLallen, Aaron, 2018. "The economics of patient-centered care," Journal of Health Economics, Elsevier, vol. 59(C), pages 60-77.

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    More about this item

    Keywords

    principal-agent-supervisor; corporate actor; corporate governance; regulatory procedure; governance; interface actor;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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