1,721,062 research outputs found
Auditing and property rights
No full textThis is the official published version. Copyright @ 2004 RANDThird-party audit provides incentives to an agent whose actions affect the value of an asset. When audit intensity and outcome are unverifiable, we show that with interim-participation constraints the optimal mechanism may use only the auditor's report, disregarding the agent's information.
Furthermore, the auditor obtains the asset and the agent a monetary compensation, when a
high asset value is reported. This suggests regulating renewable resources or utility networks by giving entrants the option to buy the right to use the asset at a predetermined price, and financially
rewarding incumbents for good performance.The second author used financial support of the Communaute francaise de Belgique (projet ARC 98/03-221) and EU TMR Network contract no. FMRX-CT98-0203
Building and managing facilities for public services
No full textWe model alternative institutional arrangements for building and managing facilities for provision of
public services, including the use of the Private Finance Initiative (PFI), by exploring the effects on
innovative investment activity by providers. The desirability of bundling the building and management
operations is analyzed, and it is considered whether it is optimal to allocate ownership to the public or the
private sector. We also examine how the case for PFI is affected by the (voluntary or automatic) transfer of
ownership from the private to the public sector when the contract expires. Asset specificity and servicedemand
risk play critical roles
Risk allocation and the costs and benefits of public-private partnerships
Full text linkWe study the agency costs of delegated public service provision, focusing on the link between
organizational forms and uncertainty at project implementation.We consider a dynamic multitask
moral hazard environment where the mapping between effort and performance is ex ante uncertain
but new information may arise during operations. Our analysis highlights the costs and benefits
that bundling planning and implementation—as under public–private partnerships—can bring
in terms of project design and operational costs under various scenarios, possibly allowing for
asymmetric information, moral hazard and renegotiation. It also shows that relying on private
finance enhances the benefits of bundling only if lenders have enough expertise to assess project
risks
Procurement Cartels and the Fight Against (Outsider) Bribing
No full textWe study the relationship between collusion and corruption in a stylized model
of repeated procurement where the cost of reporting corrupt bureaucrats gives rise
to a free riding problem. Cooperation among long-run (honest) firms alleviates free-
riding in reporting. However, it also facilitates collusion in bidding by increasing
the value of the collusive rent. In turn, bidding collusion facilitates cooperation in
reporting by increasing the value of having honest bureaucrats, generating a trade-off
between collusion and corruption
Organising Competition for the Market
No full textWe study competition for the market in a setting where incumbents (and, to a lesser extent, neighbouring incumbents) benefit from a cost or information advantage. We first compare the outcome of staggered and synchronous tenders, before drawing the implications for market design. We find the timing of tenders interrelates with the likelihood of monopolisation. For high incumbency advantages and/or discount factors, monopolisation is expected, in which case synchronous tendering is preferable as it strengthens the pressure that entrants exercise on the monopolist. For low incumbency advantages and/or discount factors, other firms remain active, in which case staggered tendering is preferable as it maximises competitive pressure coming from the other firms. We use bus tendering in London to illustrate our insights and draw policy implications
Delegation of Contracting in the Private Provision of Public Services
No full textWe use an incomplete-contract approach to compare contracting out by a public sector agency with the delegation of contracting out to a public-private partnership (PPP) that is a joint venture between private and public sector agents. The PPP maximizes a linear combination of profit and social benefit. Such delegation may be desirable to curb innovations that reduce the cost of provision but also reduce social benefit. Delegation may be undesirable for innovations that increase social benefit but also raise costs. Our results are explained in terms of the shadow cost of public funds and the negotiating stance of the PPP. Copyright Springer 2006delegation, Private Finance Initiative, public private partnership, public service provision, H11, L33,
Information provision and monitoring of the decision-maker in the presence of an appeal process
No full textWe consider a setting where a decision-maker has to resolve a dispute between
two parties. On demand of the losing party, the decision may be subject to review
by an appellate body. The decision-maker has discretionary power and may be
opportunistic. Depending on the institution design, information on the dispute is
provided either by the parties themselves or by an independent investigator. We
show that information provision by the parties generates more efficient monitoring
through appeals and less opportunism by the decision-maker than information
provision by the investigator. We discuss our results in light of the adversarialversus-
inquisitorial controversy
Potenzialità e criticità del partenariato pubblico private in Italia
No full textIn this paper we discuss procedural and contractual aspects
of Public Private Partnerships (PPP) in Italy, in the light of the
economic theory of contracts and of incentives. We emphasize the
potential role for PPPs for infrastructure development in Italy and
the inefficiencies that arise in practice because of administrative
risk, procedural complexity that distort competition and inefficient
allocation of risks between the public and the private sector
Setting the budget for targeted research projects
Full text linkWe consider a funding competition for targeted projects. Potential participants have stochastic opportunity costs, and do not know the number of competitors. The funding agency sets a budget cap indicating the maximum funding that participants may request. We show that raising the budget cap helps to attract more participants but causes an increase in the requested funds. A higher budget cap is optimal when the preferences of researchers and the funding agency are more congruent, competition is lower, targeted projects have larger social value, the cost of public funds is smaller, or bidding preparation costs are lower
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