Competition and the Reform of Incentive Schemes in the Regulated Sector

Marcel Boyer and Jean-Jacques Laffont

CIRANO Working Papers from CIRANO

Abstract: We consider a regulation problem with complete contracting in a principal-agent model with adverse selection and review within this model the various channels by which external competition parameters affect incentives within the regulated firm. The channels are: the principal's information, the principal's objective function, the agent's incentive constraint, the agent's participation constraint. We consider in particular a better information structure, a threat of liquidation, a fight for talent, a more efficient private sector, and the existence of better substitutes. We characterize in each case the conditions under which the effect on incentives is positive. Nous analysons dans un modèle principal-agent avec sélection adverse et contrats complets comment les incitations dans une entreprise réglementée sont affectées par la concurrence externe à travers son effet sur l'information et la fonction objectif du principal d'une part et les contraintes de compatibilité incitative et de rationalité individuelle de l'agent d'autre part. Nous considérons plus précisément les sources suivantes de pressions concurrentielles accrues: une meilleure structure d'information, une menace plus forte de liquidation, une concurrence plus intense pour le talent, un secteur privé plus efficace, et l'existence de meilleurs substituts. Nous caractérisons dans chaque cas les conditions sous lesquelles l'effet sur les incitations est positif.

Keywords: Public sector incentives; competition; Incitations secteur public; concurrence (search for similar items in EconPapers)
Date: 2000-11-01
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Citations: View citations in EconPapers (1)

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Related works:
Journal Article: Competition and the reform of incentive schemes in the regulated sector (2003)
Journal Article: Competition and the reform of incentive schemes in the regulated sector (2003)
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Persistent link: https://EconPapers.repec.org/RePEc:cir:cirwor:2000s-58

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