Internal Incentive Mechanism of Public Agent-Construction Enterprises Based on Common Agency Model
Common agency is the main feature of public sector’s internal incentive mechanism. As the public sector, endogenous features of PACE will lead to defects of internal incentive system. Regarding the public agent-construction enterprise as an agent of two principals which are client and government, a common agent model is constructed and analyzed in-depthly. The findings of this paper clarify two aspects of theoretical basis for the regulatory policy: 1) the optimal conditions of an incentive contract; 2) the substitution relationship of the tasks of two principals causes distortion to the incentive mechanism and leads to incentive efficiency loss.
Chaohe Chen, Yong Huang and Guangfan Li
Z. B. Wu et al., "Internal Incentive Mechanism of Public Agent-Construction Enterprises Based on Common Agency Model", Advanced Materials Research, Vols. 243-249, pp. 6268-6272, 2011