Information, Incentives and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises

Posted: 3 Sep 1998

See all articles by Mary M. Shirley

Mary M. Shirley

World Bank - Development Research Group (DECRG)

Lixin Colin Xu

World Bank - Development Research Group (DECRG)

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Abstract

This article analyzes the experience with performance contracts between developing country governments and the managers of their state owned enterprises. It identifies how problems of information asymmetry, incentives, and commitment can lead to shirking. It applies this conceptual framework to a sample of 12 contracts with monopoly state enterprises in six developing countries and finds that all suffer from serious contracting problems and there is no pattern of improved performance that can be attributed to the contracts.

JEL Classification: D21, D23, L32

Suggested Citation

Shirley, Mary M. and Xu, Lixin Colin, Information, Incentives and Commitment: An Empirical Analysis of Contracts between Government and State Enterprises. Journal of Law, Economics, and Organization, Vol. 14, No. 2, Fall 1998. Available at SSRN: https://ssrn.com/abstract=122628

Mary M. Shirley (Contact Author)

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
Policy Research Department
Washington, DC 20433
United States
202-473-7483 (Phone)
202-522-1155 (Fax)

Lixin Colin Xu

World Bank - Development Research Group (DECRG) ( email )

1818 H Street, N.W.
MC 3-427
Washington, DC 20433
United States
202-473-4664 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/cxu

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