A. Shleifer and R. W. Vishny, “Politicians and Firms,” Quarterly Journal of Economics, Vol. 109, No. 4, 1994, pp. 995-1025. doi:10.2307/2118354
has been cited by the following article:
- TITLE: Incentives in Public and Privatized Firms under Incomplete Contracting Situations
- AUTHORS: Takeshi Miyazaki
- KEYWORDS: Incentives in the Public Sector; Incomplete Contracts; Privatization; Ownership Rights
JOURNAL NAME: Theoretical Economics Letters
Sep 05, 2014
- ABSTRACT: It is argued that incentives for employees in the public service agencies will necessarily be weak because of the multiple dimensions of products, multiple principals, incomplete contract, and socializing. Some empirical studies refer to incomplete contracting situations as part of the cause of the diminishing of the public sector. This work investigates the effects of privatization and ownership shares on incentive schemes for employees who work for public or privatized firms under incomplete contracting situations. Two main results are obtained. First, the incentive intensity of public firms decreases as the government has more ownership shares, and the social benefit declines. Second, privatized firms offer their employees higher-powered incentive contracts than do public firms.