IDEAS home Printed from
   My bibliography  Save this paper

La funzione economica del contratto di servizio nella trasformazione in spa delle aziende di servizi pubblici locali
[The economic function of the contract for local utilities]


  • Termini, Valeria
  • Cella, Michela


This paper raises a neglecteed point in the literature on local public services, showing that even "formal privatizaion" (the transformation of the service provider into a joint-stock company) has a significant influence on the agents involved. The relationship between local government and the firm is examined in different scenarios using the formal tools of contract theory. The article shows how the service contract, introduced after formal privatization, changes the incentives and the productive efficiency of the firm. This contract is a flexible instrument which permits optimal tradeoffs between conflicting objectives: the local government's interest in maximizing revenues and the quality of local services in the short run and the profit maximization objective of the more independent and market oriented firm. The paper also provides a historical and normative overview of the evolution of local public utilities, which offers empirical support for the theoretical results.

Suggested Citation

  • Termini, Valeria & Cella, Michela, 1999. "La funzione economica del contratto di servizio nella trasformazione in spa delle aziende di servizi pubblici locali
    [The economic function of the contract for local utilities]
    ," MPRA Paper 22486, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:22486

    Download full text from publisher

    File URL:
    File Function: original version
    Download Restriction: no

    References listed on IDEAS

    1. Schmidt, Klaus M, 1996. "The Costs and Benefits of Privatization: An Incomplete Contracts Approach," Journal of Law, Economics, and Organization, Oxford University Press, vol. 12(1), pages 1-24, April.
    Full references (including those not matched with items on IDEAS)

    More about this item


    contract theory; local utilities; privatization of public service utilities;

    JEL classification:

    • H70 - Public Economics - - State and Local Government; Intergovernmental Relations - - - General
    • L97 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Utilities: General
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:22486. 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: (Joachim Winter) or (Rebekah McClure). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.