Publication:
Deregulating the economy: centralized vs. market - like systems. The principal-agent perspective applied to the transport sector

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Date
2000
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EUT Edizioni Università di Trieste
ISTIEE Istituto per lo studio dei trasporti nell’integrazione economica europea
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Abstract
In the paper, the existence of coordination mechanisms capable of achieving Pareto efficiency under uncertainty conditions (information asymmetry) is investigated. Referring to the deregu¬lation processes under way within the transport system, coordination mechanisms are modelled as principal-agent relationships, public sector being the principal and private operators being agents. It is shown that optimum incentive-compatible mechani¬sms (Nash equilibria) in a deregulated system leads to an inefficient allocation of resources unless agents are risk-neutral. It is also shown that using information as a strategic resource there is some room for efficiency improvement by monitoring agents and by repeating the agency relationship over time.
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incentives, information asymmetry, competitive market, market failures, coordination mechanisms, theory of contracts
Citation
Marco Mazzarino, "Deregulating the economy: centralized vs. market - like systems. The principal-agent perspective applied to the transport sector", in: European Transport / Trasporti Europei, VI (2000) 14, pp. 44-50