Arm's length delegation of public services
Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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Arm's length delegation of public services. / Bennedsen, Morten; Schultz, Christian.
I: Journal of Public Economics, Bind 95, Nr. 7-8, 2011, s. 543-552.Publikation: Bidrag til tidsskrift › Tidsskriftartikel › Forskning › fagfællebedømt
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TY - JOUR
T1 - Arm's length delegation of public services
AU - Bennedsen, Morten
AU - Schultz, Christian
N1 - JEL classification: D72, L33, L97
PY - 2011
Y1 - 2011
N2 - Delegation is a key feature of political decision making: Mayors or prime ministers delegate to subordinates, voters delegate to elected representatives. We analyze the effect of political delegation on public service provision and the choice between private or public providers when contracts are incomplete and incentives therefore distorted. We identify two important effects: The incentive effect increases the incentive part of service providers' remuneration and delegation may therefore be a substitute for an explicit complete incentive contract. The bargaining effect improves the bargaining position vis a vis a private firm with market power. In general, these effects imply that delegation improves public service provision.
AB - Delegation is a key feature of political decision making: Mayors or prime ministers delegate to subordinates, voters delegate to elected representatives. We analyze the effect of political delegation on public service provision and the choice between private or public providers when contracts are incomplete and incentives therefore distorted. We identify two important effects: The incentive effect increases the incentive part of service providers' remuneration and delegation may therefore be a substitute for an explicit complete incentive contract. The bargaining effect improves the bargaining position vis a vis a private firm with market power. In general, these effects imply that delegation improves public service provision.
KW - Representative democracy
U2 - 10.1016/j.jpubeco.2011.02.002
DO - 10.1016/j.jpubeco.2011.02.002
M3 - Journal article
VL - 95
SP - 543
EP - 552
JO - Journal of Public Economics
JF - Journal of Public Economics
SN - 0047-2727
IS - 7-8
ER -
ID: 33646043