The proper scope of government reconsidered: Asymmetric information and incentive contracts

We revisit the contract-theoretic literature on privatization initiated by Hart et al. (1997). This has two major shortcomings. First, it is focused ex-ante investment incentives, whereas ex-post inefficiencies which are ubiquitous in real world cannot be explained. Second, ownership does not matter when incentive contracts can written. Both shortcomings due to fact that this studied case of symmetric information only. explore how asymmetric leads different kinds depending structure. Moreover, we show under matters even feasible.