Abstract
Starting from the contract as a coordination mechanism, this article questions the effectiveness of contractual regulatory mechanisms, i.e. the ability of regulation to attain its goal, not only in efficiency terms through the analysis of the production function, but also in organizational terms. Theories of agency and transaction costs are well-suited to investigation of coordination problems in regulation. The relationship between the regulator and the regulated firm has to be regarded as a principal-agent relationship included in a more general framework taking into consideration the differentiated effects of internal incentives schemes and of the labor, goods and capital markets as additional external incentive mechanisms to correct the behaviour of the regulated firm. Improvement of regulation rests on the regulated firm's capacity to minimize transaction costs associated with the whole coordination problem. The distinction between regulated private enterprise and public enterprise allows one to identify the property rights costs.
Published Version
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call