scholarly journals INCENTIVE MECHANISM FOR PERFORMANCE-BASED PAYMENT OF INFRASTRUCTURE PPP PROJECTS: COUPLING OF REPUTATION AND RATCHET EFFECTS

2022 ◽  
Vol 0 (0) ◽  
pp. 1-21
Author(s):  
Huimin Li ◽  
Limin Su ◽  
Jian Zuo ◽  
Xianbo Zhao ◽  
Ruidong Chang ◽  
...  
Keyword(s):  
Bargaining Power ◽  
Incentive Mechanism ◽  
Incentive Contracts ◽  
Improve Performance ◽  
Ratchet Effect ◽  
Performance Targets ◽  
Assessment Period ◽  
The Government ◽  
Incentive Incompatibility ◽  
Ratchet Effects

The performance-based payment PPP model has been widely used in the infrastructure projects. However, the ratchet effect derived from performance-based reputation incentives has been largely overlooked. To overcome this shortcoming, ratchet effect is considered in the performance-based payment incentive process. A multi-period dynamic incentive mechanism is developed by coupling the reputation and ratchet effect. The main results show that: (1) Under the coupling of reputation and ratchet effects, the optimal incentive coefficient in the last performance assessment period is always greater than that of the first period. The bargaining power can replace part of the incentive effect; (2) Due to the ratchet effect, if the government improve performance targets through performance adjustment coefficients, it needs to increase incentives to overcome the decreasing effort of the private sector; (3) When the bargaining power and punishment coefficient are small, the reputation incentive is replacing the explicit incentive. The increasing incentive coefficient would make the ratchet effect dominant the reputation effect; (4) To prevent the incentive incompatibility derived from the ratchet effect, the government should increase the incentive while increasing the punishment to achieve the “penalties and rewards”. This study provides theoretical and methodological guidance to design incentive contracts for infrastructure PPP projects.

Performance Target Revisions in Incentive Contracts: Do Information and Trust Reduce Ratcheting and the Ratchet Effect?

2015 ◽  
Vol 90 (5) ◽  
pp. 1755-1778 ◽  
Author(s):  
Jasmijn C. Bol ◽  
Jeremy B. Lill
Keyword(s):  
Structural Changes ◽  
Data Availability ◽  
Performance Information ◽  
Ratchet Effect ◽  
Past Performance ◽  
Performance Targets ◽  
Positive Performance ◽  
Confidentiality Agreement ◽  
To Receive ◽  
Performance Target

ABSTRACT In this study, we examine a setting where principals use past performance to annually revise performance targets, but do not fully incorporate the past performance information in their target revisions. We argue that this situation is driven by some principals and agents having an implicit agreement where the principal “allows” the agent to receive economic rents from positive performance-target deviations that are the result of superior effort or transitory gains by not revising targets upward, while the agent “accepts” target revisions by not restricting output when these revisions are the result of structural changes in the operation's true economic capacity. Although both the principal and the agent can benefit from an implicit agreement, we argue that for the implicit agreement to be maintainable, the principal either needs information on the cause of the performance-target deviation or there needs to be trust between the principal and the agent. Using archival data across multiple years and independent bank units, we find a pattern of ratchet attenuation and output restriction that is consistent with the existence of implicit agreements for those principal-agent dyads where information asymmetry is sufficiently reduced or mutual trust exists. Data Availability: Data used in this study cannot be made public due to a confidentiality agreement with the participating firm.

Top management selection for public enterprise : Is private sector model appropriate ?

1982 ◽  
Vol 7 (1) ◽  
pp. 9-18 ◽  
Author(s):  
K.R.S. Murthy
Keyword(s):  
Middle Management ◽  
Public Enterprise ◽  
Top Management ◽  
Public Enterprises ◽  
Improve Performance ◽  
Sector Model ◽  
Planning And Control ◽  
Selection For ◽  
The Government ◽  
And Control

Top management selection for pubticenterprises hasbeena continuing problem for the Government. Scores of public enterprises, including some big and important ones, remain headless at any time, despite Government efforts. Actual tenures have remained short and a satisfactorily long aver-age tenure stilt remamvorrir" a* §oot. In this timely article, Professor Murthy questions the appropriateness of the model of enterprise used in public enterprise. > to rrnnf nplunliTni thr top manager's job and the problem of relating the man to rtf»jabin public enterprise using four planning and control models—private enterprise, staff, middle management, and factory manager. The power of appointment to improve performance is enhanced if the choice of the person, the enterprise's needs, and the planning and control model that the government is able to use are in balance. Drawing from experiences of public enterprises in India, Turkey, and the U.S., he emphasizes how political power can strengthen the appointment process and, thus, the performance of public enterprise.

scholarly journals Tax amnesty and secondary tax evasion

2020 ◽  
Vol 70 (1) ◽  
pp. 123-139
Author(s):  
Yu-Kun Wang ◽  
Li Zhang ◽  
We-Me Ho
Keyword(s):  
Tax Evasion ◽  
Initial Assessment ◽  
Tax Revenue ◽  
Pareto Improvement ◽  
Tax Amnesty ◽  
Policy Tool ◽  
Assessment Period ◽  
The Government ◽  
Behavioural Aspects

AbstractThough tax amnesties (TAs) are considered as a policy tool to increase revenue for governments, they have generated some puzzles. To solve the puzzles of TA we should not ignore the behavioural aspects of delinquent taxpayers. In this paper, we focus on a relatively neglected but important area of the TA literature. Considering that people who participate in tax amnesty policy (TAP) may not honestly report the whole amounts of evaded tax, thus they commit a secondary tax evasion. We indicate that even considering the risk of abstaining from TA and incurring possible uncertainty of tax evasion penalties, participating in a TA provides a higher level of utility for the delinquent taxpayers. Also, due to a secondary tax evasion usually accompanying with TA, we show that during the initial assessment period of a TAP the tax revenue drastically increases and when the assessment period is approaching the tax revenue stably declines and ultimately converges to a fixed value. Furthermore, we show that if delinquent taxpayers participate in the TAP and the penalties are larger than the expected tax revenue of the government, it increases the tax revenue without reducing the welfare of other taxpayers, so as to achieving Pareto improvement.

scholarly journals Environmental Regulation, Enterprises' Bargaining Power, and Enterprises' Total Factor Productivity: Evidence from China

2021 ◽  
Author(s):  
Shuwang Yang ◽  
Chao Wang ◽  
Hao Zhang ◽  
Tingshuai Lu ◽  
Yang Yi
Keyword(s):  
Environmental Regulation ◽  
Total Factor Productivity ◽  
Environmental Economics ◽  
Bargaining Power ◽  
Factor Productivity ◽  
Firm Level ◽  
Capital Cities ◽  
Provincial Capital ◽  
The Government ◽  
The Relationship

Abstract The relationship between environmental regulation and enterprises' total factor productivity (TFP) has been a hot topic in the field of environmental economics, but the conclusions are still mixed. Employing a sample of 14,110 firm-year observations in China from 2010 to 2018, our research explores whether and when environmental regulation could trigger firms, to enhance TFP. The available evidence leads us to cautiously conclude that: 1) Environmental regulation notably improves enterprises' TFP, the conclusion still holds after a series of robustness tests. 2) Enterprises' bargaining power significantly weakens the influence of environmental regulation on enterprises' TFP. 3) Compared with non-state-owned enterprises and non-heavy-polluting industries, environmental regulation has a greater impact on state-owned enterprises and heavy-polluting industries; higher executive compensation does not motivate firms to improve TFP; compared with enterprises headquartered in non-provincial capital cities, environmental regulation has a greater impact on enterprises' TFP in provincial capital cities. Overall, the findings of our research are extremely relevant for the government, investor, and enterprise's manager, this paper provides micro-firm-level evidence for the Porter hypothesis in practice in China.

scholarly journals Impact of Covid-19 on Cooperatives Movement in Rwanda

2020 ◽  
pp. 1-5
Author(s):  
Jean Bosco Harelimana ◽  
◽  
Pacifique Mugwaneza ◽  
Nteze Claude Musabwa ◽  
◽  
...  
Keyword(s):  
Bargaining Power ◽  
Economies Of Scale ◽  
Secondary Data ◽  
New Product ◽  
Economic Transformation ◽  
Descriptive Statistics ◽  
Prevention Measures ◽  
Working Capital ◽  
Reduced Costs ◽  
The Government

Cooperatives play important role in promoting inclusive, sustainable development and economic transformation. Cooperatives can offer significant benefits to their members through the principle of strength in numbers and pooled resources, including increased bargaining power; reduced costs through economies of scale; the ability to obtain goods or services they otherwise would not have access to; the ability to diversify and expand production into new product ranges; the ability to improve product quality through collective investment; and overall increased incomes in accordance with cooperative values and principles. The world now encounters a grim reality, with exponential growth of contagion of COVID-19 pandemic, human lives are being lost and the virus continues to spread rapidly across the globe. Different prevention measures including the confinement were enacted by the government. Cooperatives operations were suspected due to the confinement. This paper examines the impacts of COVID-19 pandemic on cooperatives in Rwanda using descriptive statistics from primary and secondary data collected which helped to draw conclusions on the effect of the pandemic. The results highlight the impacts till now of the pandemic on cooperative formation, income losses for both members and cooperatives, effects on working capital and investment, and key facts on cooperative contributions to support their members.

scholarly journals Pengangguran Di Tengah Puncak Bonus Demografi Pada Era Pandemi Covid-19

IJAcc ◽  
2021 ◽  
Vol 2 (1) ◽  
pp. 74-81
Author(s):  
Rizka Azzahra
Keyword(s):  
Bargaining Power ◽  
The Elderly ◽  
The Other ◽  
Direct Impact ◽  
The World ◽  
Huge Impact ◽  
The Government ◽  
Worship Education ◽  
Age Range ◽  
The Impact

Demographers predict that in the period 2020-2030 Indonesia will experience a demographic bonus with a peak around 2030. At that time, the number of people with productive age in Indonesia, namely the age range of 15-64 years, far exceeds those who are included in the nonproductive age (children and the elderly). The Demographic Bonus should be a very positive thing where Indonesia can get extraordinary benefits, making Indonesia have high competitiveness and bargaining power. But on the other hand, Indonesia is currently facing serious problems due to the impact of the Covid-19 pandemic that has hit the world. Social distancing (physical distancing) carried out to anticipate the spread and expansion of the Covid 19 pandemic has made changes in various fields, both in the economy, transportation, worship, education, government and entertainment that have a direct impact on labor. The number of job cuts that occurred during the Covid-19 pandemic had a huge impact because not all of the workforce could be accommodated in the world of work, as a result it would encourage an increase in the number of unemployed in Indonesia. This study aims to analyze the dynamics of unemployment in Indonesia and the steps that need to be taken by the government and the Indonesian people in order to face the era of demographic bonuses in the midst of the Covid-19 pandemic so that this demographic bonus does not become a wave of mass unemployment in Indonesia.

scholarly journals role of technology in improving the financial inclusivity of banking institution: literature research with Indonesian case

2021 ◽  
Vol 4 (1) ◽  
Author(s):  
I Gst Ngr. Alit Asmara Jaya ◽  
Ida Bagus Putu Purbadharmaja
Keyword(s):  
Financial Services ◽  
Financial Institution ◽  
Qualitative Description ◽  
Improve Performance ◽  
Role Of Government ◽  
Banking Institutions ◽  
The Government ◽  
Banking Institution ◽  
Role Of The Government

This article was written to see how technology plays a role in improving the financial inclusiveness of banking institutions and the role of government and regulator as well. Technology that has grown rapidly in recent decades has been able to make rapid progress in the industry and change people's behavior. Technology is becoming an inevitability that encourages progress in the economy. Banking as one of the supporting sectors of the financial institution industry, need to do efforts continuously to develop through innovation in fulfilling the needs of financial services, in order to improve performance with the application of technology. Using the approach of literature review and former empirical study, the author tries to perform qualitative description analysis of technological role in increasing financial inclusiveness of banking institution and role of the government and regulator as well. The results show that technology has an important role in boosting strategy to increase financial inclusiveness through improving financial performance. Regardless of the role of government and regulator to create condusiveness of the such technological role.

scholarly journals Anatomy of the Privatization of State-Owned Enterprises (SOEs) in Ghana: Implication for Policy and Accountability

2019 ◽  
Vol 9 (4) ◽  
pp. 181
Author(s):  
Eugene Danso
Keyword(s):  
Monitoring And Evaluation ◽  
Policy Outcomes ◽  
Principal Agent ◽  
Private Ownership ◽  
Principal Agent Theory ◽  
Performance Targets ◽  
Agent Theory ◽  
Administrative Policy ◽  
Company Limited ◽  
The Government

With the administrative and operational functions of State-Owned Enterprises (SOEs) becoming increasingly complex and sophisticated among developing countries by the 1980s, privatization was recommended by the IMF/World Bank as a remedy to these institutional deficiencies . This is contingent on the neoclassical debate that private ownership rather than public ownership of management and operations of SOEs results in prudent policy process and accountability. Therefore, this study sought to assess the validity of this assertion by employing the Principal-Agent theory in assessing the level of accountability between the citizens (principal) and the government (agent) during private ownership of service delivery. As a qualitative study, this paper adopts unobtrusive content analysis of an empirical study of the privatization of Ghana Water Company Limited (GWCL). The government (agent) under the Principal-Agent theory is to ensure that the private operator, Aqua Vitens Rand Limited (AVRL) respects the terms of divestiture, while upholding the principles of accountability. However, the findings of the study suggest that the failure of government (agent) to uphold core accountability mechanisms such as transparency, accessibility to information, sense of ownership, responsiveness, and conformity to established monitoring and evaluation measures, contributed to the inability to achieve key performance targets, leading to the unsuccessful policy outcome of the privatization contract. This paper, therefore, argues that the failure to adopt accountability mechanisms in the divestiture of SOEs will inevitably compromise administrative policy outcomes.

scholarly journals The Internationalisation of Mainland Chinese Firms into Malaysia: From Obligated Embeddedness to Active Embeddedness

2014 ◽  
Vol 33 (2) ◽  
pp. 59-90 ◽  
Author(s):  
Guanie Lim
Keyword(s):  
Bargaining Power ◽  
The State ◽  
Construction Sector ◽  
Chinese Firms ◽  
Mainland Chinese ◽  
Cross Border ◽  
Competitive Industry ◽  
The Government ◽  
Political Economic ◽  
Selection Of

This paper examines the rationale by which mainland Chinese firms choose their coalition partners in their Malaysian ventures. I explore how, under certain political economic conditions, such cross-border investment and corporate tie-ups can be shaped to meet the Malaysian state's objectives. I argue that the Malaysian state has enjoyed success in the construction sector by nurturing cooperation between its carefully groomed government-linked companies and mainland Chinese firms. Government-linked companies are useful coalition partners for the mainland Chinese firms because of the crucial role the state plays in creating a largely non-competitive industry that favours government-linked companies. Outside of the construction sector, however, the state has enjoyed markedly less success in fostering cooperation between the mainland Chinese firms and the government-linked companies. Consequently, the mainland Chinese firms possess more bargaining power vis-à-vis the state when they invest in these sectors, enjoying considerable autonomy in the selection of their coalition partners.

Regulation by Negotiation: the Private Benefit Bias

2002 ◽  
Vol 2 (1) ◽  
Author(s):  
Ariane Lambert-Mogiliansky ◽  
Pierre Picard
Keyword(s):  
Bargaining Power ◽  
New Technologies ◽  
Relative Weight ◽  
Capacity Investment ◽  
Public Ownership ◽  
Incomplete Contract ◽  
Private Benefits ◽  
Ex Post ◽  
The Government ◽  
Output Quantity

This paper analyses the role of the managers' non-pecuniary private benefits in an incomplete contract approach to the regulation of utilities. Private benefits may take various forms: excessive job security, perks, overstaffing, feeling of power. The model describes the relationship between a government and the manager of a firm which produces a pure public good, under private or public ownership. The firm's production is characterized by its quantity and its flexibility, the latter corresponding to adaptability to changes in consumers' tastes or to new technologies. A larger output quantity entails larger private benefits to the manager, while increasing flexibility runs counter to the managers' private benefits. The manager decides upon non-verifiable investment in human and non-human capital so as to facilitate an increase in the output quantity (capacity investment) or to improve the firm's flexibility (investment in organizational adaptability). We compare the effects of the ownership regime on the manager's incentives to invest and on the aggregate welfare. The private firm under-invests in capacity and organizational flexibility. This is because the government holds up a part of the gains through ex post renegotiation of the initial (incomplete) contract. Our analysis also highlights a fundamental bias in the investment behavior of the state-owned firm: the manager of the public firm only invests in capacity (he may even invest more than under private ownership) but he never invests in organizational adaptability. The model shows that an increase in the government's bargaining power exacerbates the hold up problem when the firm is privately owned, but that this result may be reversed for capacity investment under public ownership. Finally, we show that the superiority of private or public ownership depends simultaneously on three factors: the respective bargaining power of the manager and of the government, the degree of specificity of investments and the relative weight of quantity and flexibility concerns in the social welfare.

Sign in / Sign up

Export Citation Format

Share Document