Reputation, control rights and game equilibrium -A game analytical framework and application to SOEs in China

Junlin Li () and Tianyou Li
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Junlin Li: School of Economics, Renmin University of China, Beijing 100872, China
Tianyou Li: School of Economics, Renmin University of China, Beijing 100872, China

Frontiers of Economics in China-Selected Publications from Chinese Universities, 2008, vol. 3, issue 4, 513-530

Abstract: Using the reputation model of Kreps (1982), Vickers (1986) and Barro(1986), we develop a dynamic game model with incomplete information to examine the relations between the managers of state-owned enterprises(SOEs) in China and the government as the enterprise¡¯s owner. Employing the model, we show that even a noncoopertive manager will not intrude the owner¡¯s interests until the last period of his term in order to maximize his long term utility. The paper also discusses some phenomenona in state-owned enterprises in China, such as ¡°insiders¡¯ control¡±, ¡°59 phenomenon¡± and excess on-the-job consumption.

Keywords: reputation; control rights; SOEs; equilibrium (search for similar items in EconPapers)
JEL-codes: C73 L14 L29 (search for similar items in EconPapers)
Date: 2008
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