This paper applies incentive theory to the context of the European Union (EU) Regional Policy. The core instruments of the policy are the Structural Funds, capital grants that áow from the European Commission (EC) to Member States and regional authorities to promote investment and growth at local level. The EU grants need a co-payment by the regional government and do not cover in full the investment cost. We model this situation, similar to several other supra- national or federal contexts, as a simple principal-supervisor-agent model of the investment game between a supranational player (the principal), such as the EC, a non (fully) benevolent regional government (the supervisor), and a private Örm (the executing agency). We show how the role of providers of additional information, the region (ex-ante) and an evaluator (ex-post) is crucial to reducing the optimal value of the grant and to improving the inefÖciencies caused by asymmetric information at the grant decision stage in a federal hierarchy.

Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy / M. Cella, M. Florio. - [s.l] : Università degli Studi di Milano - Bicocca, 2009 Jun. (WORKING PAPER SERIES / UNIVERSITÀ DEGLI STUDI DI MILANO-BICOCCA, DIPARTIMENTO DI ECONOMIA POLITICA)

Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy

M. Florio
2009-06

Abstract

This paper applies incentive theory to the context of the European Union (EU) Regional Policy. The core instruments of the policy are the Structural Funds, capital grants that áow from the European Commission (EC) to Member States and regional authorities to promote investment and growth at local level. The EU grants need a co-payment by the regional government and do not cover in full the investment cost. We model this situation, similar to several other supra- national or federal contexts, as a simple principal-supervisor-agent model of the investment game between a supranational player (the principal), such as the EC, a non (fully) benevolent regional government (the supervisor), and a private Örm (the executing agency). We show how the role of providers of additional information, the region (ex-ante) and an evaluator (ex-post) is crucial to reducing the optimal value of the grant and to improving the inefÖciencies caused by asymmetric information at the grant decision stage in a federal hierarchy.
Hierarchical contracting; project evaluation; EU Regional Policy
Settore SECS-P/01 - Economia Politica
https://boa.unimib.it/retrieve/handle/10281/3312/29289/Hierarchical_contracting_in_grant_decisions.pdf
Working Paper
Hierarchical contracting in grant decisions: ex-ante and ex-post evaluation in the context of the EURegional Policy / M. Cella, M. Florio. - [s.l] : Università degli Studi di Milano - Bicocca, 2009 Jun. (WORKING PAPER SERIES / UNIVERSITÀ DEGLI STUDI DI MILANO-BICOCCA, DIPARTIMENTO DI ECONOMIA POLITICA)
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Utilizza questo identificativo per citare o creare un link a questo documento: http://hdl.handle.net/2434/610621
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