Government outsourcing: public contracting with private monopoly

Arbeitspapier

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.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: CESifo Working Paper ; No. 1733

Classification and Topics

• Classification: Wirtschaft ; Legal Monopolies and Regulation or Deregulation ; Economics of Regulation ; Asymmetric and Private Information; Mechanism Design ; Comparison of Public and Private Enterprises and Nonprofit Institutions; Privatization; Contracting Out
• Subject: Privatisierung ; Adverse Selection ; Natürliches Monopol ; Theorie ; Privatisierung ; Adverse Selection ; Natürliches Monopol ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Auriol, Emmanuelle ; Picard, Pierre M.
• Event: Veröffentlichung
• (who): Center for Economic Studies and ifo Institute (CESifo)
• (where): Munich
• (when): 2006

Further information

• Handle: http://hdl.handle.net/10419/25778
• Last update: 10.03.2025, 11:42 AM CET