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Public firm incentives under asymmetric information and prospect of deregulation and privatization

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  • Huric Larsen, J.F.

Abstract

Governments dislike poorly performing public firms and often see deregulation and privatisation as a way to improve performance and social welfare. From a theoretical point of view poor performance may be due to information asymmetries between the informed public firm and the relatively uninformed regulator. The point of view in the paper is that the information asymmetries that makes the regulator unable to achieve first best during regulation, is also the cause of deregulation and privatization failure. The effect on public firm incentives from introducing deregulation as a consequence from choosing a specific regulation contract is analysed.

Suggested Citation

  • Huric Larsen, J.F., 2012. "Public firm incentives under asymmetric information and prospect of deregulation and privatization," MPRA Paper 39351, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:39351
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    File URL: https://mpra.ub.uni-muenchen.de/39351/1/MPRA_paper_39351.pdf
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Regulation; public firms; incentives; optimal deregulation; asymmetric information; deregulation; privatization; contracts; public policy;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • D01 - Microeconomics - - General - - - Microeconomic Behavior: Underlying Principles

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