Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy

Michela Cella () and Massimo Florio

No 171, Working Papers from University of Milano-Bicocca, Department of Economics

Abstract: This paper applies incentive theory to the context of the European Union (EU) Regional Policy. The core instruments of the policy are the Structural Funds, capital grants that ?ow from the European Commission (EC) to Mem- ber States and regional authorities to promote investment and growth at local level. The EU grants need a co-payment by the regional government and do not cover in full the investment cost. We model this situation, similar to several other supra- national or federal contexts, as a simple principal-supervisor-agent model of the investment game between a supranational player (the principal), such as the EC, a non (fully) benevolent regional government (the supervisor), and a private ?rm (the executing agency). We show how the role of providers of additional information, the region (ex-ante) and an evaluator (ex-post) is crucial to reducing the optimal value of the grant and to improving the inef- ?ciencies caused by asymmetric information at the grant decision stage in a federal hierarchy

Keywords: Hierarchical contracting; project evaluation; EU Regional Policy (search for similar items in EconPapers)
JEL-codes: D82 H77 R58 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009-06, Revised 2009-06
New Economics Papers: this item is included in nep-cta, nep-eec, nep-geo and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
http://repec.dems.unimib.it/repec/pdf/mibwpaper171.pdf First version, 2009 (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:mib:wpaper:171

Access Statistics for this paper

More papers in Working Papers from University of Milano-Bicocca, Department of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Matteo Pelagatti ().