Resource title

Government outsourcing: public contracting with private monopoly

Resource image

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Resource description

The paper studies the impact of government budget constraint in a pure adverse selection problem of monopoly regulation. The government maximizes total surplus but incurs some cost of public funds. An alternative to regulation is proposed in which firms are free to enter the market and to choose their price and output levels. However the government can contract ex-post with the private firms. This ex-post contracting set-up allows more flexibility than traditional regulation where government commits to both investment and operation cashflows. This is especially relevant in case of high technological uncertainties.

Resource author

Emmanuelle Auriol, Pierre M. Picard

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/25778

Resource license

Adapt according to the presented license agreement and reference the original author.