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| Author: | Caillaud, B. Jullien, B. Picard, P. |
| Title: | National vs. European incentive policies: Bargaining, information and coordination |
| Journal: | European Economic Review
1996 : VOL. 40:1, p. 91-111 |
| Index terms: | EUROPEAN UNION CENTRALISATION DECENTRALISATION |
| Language: | eng |
| Abstract: | A hierarchical model of contractual relationships under moral hazard to address issues about subsidiarity, i.e. optimal (de)centralization of incentive industrial policies at the national level or at the European Community level. Incentive policy is viewed as an incentive contract for producers who take unobservable decisions that have spillover effects across member states. Contracts are designed by a community agency for producers and contractual compensatory transfers btw. states on the basis of observations. National regulators and their home producers negotiate, according to a generalised Nash bargaining etc. In this setting, the full centralisation is shown never to be optimal. Sufficient conditions for a complete decentralisation to be complete, and for both policies' interactions for producing incentives presented. |
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