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This paper shows one type of asymmetric information problems, their theoretical implications, the design of contracts that mitigate them, as well as some experimental evidence. Furthermore, by extrapolating the results, the paper tries to illustrate certain macroeconomic implications obtained under a controlled environment. [ABSTRACT FROM AUTHOR]

Entrepreneurship has become a prominent and strategically important issue when talking about the driving forces of prosperity and job creation. However, entrepreneurship seems to be poorly defined. The paper studies central assumptions by questioning what many contemporaries take for granted. The paper shows that it is necessary to define the term "entrepreneurship". Recent arguments should distinguish the difference, sometimes contradictory, between the phenomenon of dynamic fast growing firms and that of the emergence of new microenterprises of the self-employed that have neither the intention nor the possibility of growing. Economic policy debate should specify more precisely what is really meant when talking about entrepreneurship. [ABSTRACT FROM AUTHOR]

In this paper we note a complementary relationship between the Austrian school, based on the individual's role and markets, and institutional economics, which emphasizes the role of institutions in economic behavior. The idea of continuous improvement in corporate governance takes place in a system of complex and interrelated production in which the contributions of the various actors are necessary and difficult to quantify. Our working hypothesis is that institutions can to solve the distributional conflict and generate more productive organizations, while stimulating the entrepreneurial spirit. [ABSTRACT FROM AUTHOR]

This paper, examines the political costs that will have to be borne by farc; the Colombian military; Colombia's rightist politicians and elite and vested interests, internally-displaced people, the coca farmers, and Colombia's middle class. The analysis also touches on the roles and impacts of various other actors, such as bandas criminales and militant groups continuing to operate in Colombia, including the ELN. [ABSTRACT FROM AUTHOR]

The purpose of this paper is to analyze, with a new institutional economics framework, regulatory activity and its motivations. Better regulatory frameworks contribute to create an environment of legitimacy for the actions of the State. Nevertheless, this legitimacy can only be achieved by ensuring the efficiency and effectiveness of such frameworks in relation to the aim pursued such as correct market failures, reduce inequity failures, or generation of more competitive environments. [ABSTRACT FROM AUTHOR]

This paper uses Colombian data to compare the impact of inflation on the elderly and the general population. On average, the elderly spend a greater proportion on housing and health and less on education. Between December 2008 and May 2015, they experienced a higher inflation rate than the rest of the population. Lower income elderly households spend a higher share of their income on housing and food, and face higher inflation than wealthier elderly households. [ABSTRACT FROM AUTHOR]

Even though copyright is an institution which dates back to the 18th century, the economic analysis of copyright is relatively new; paradoxically it was not until 1934 with Plant's work when copyright economics started to emerge as a specialized field. This paper aims to draw an historical outline of copyright economics as a new area of economic analysis, focusing on its dilemmas and approaches, as well as on the main challenge for this institution in the digital era, unauthorized copy. [ABSTRACT FROM AUTHOR]

In recent years, various Latin American governments have attempted to render migrants as agents of development, mainly by channeling remittances to specific sectors such as housing and finance. The existing literature has yet to articulate how these new developments are reconfiguring the political economy of housing in the region. Drawing on empirical data collected at both ends of the Colombia-uk migration network, this paper argues that these efforts aim to institutionalise remittance flows and their associated transnational socio-economic activities. They are underpinned by the repositioning of housing from a consumption to an investment item, and as a driver of economic growth; as well the positioning of the financial sector as the main means for households to access public and private housing, and other basic services. These developments have taken place in the context of a broader process of financialisa-tion of the global poverty agenda in the last three decades. [ABSTRACT FROM AUTHOR]

The Colombian Government has adopted a policy to improve communication skills in English at all education levels and especially in higher education, but little has been written about the achievements of the policy. This paper examines changes in the distribution of students' English proficiency level between the start and completion of their higher education programs. The results suggest an improvement in the distribution after graduating from higher education, characterized by a greater impact at higher scoring levels and an increased polarization. [ABSTRACT FROM AUTHOR]

For several years, without any justification and against all available evidence, it has been said that in Colombia 400,000 clandestine abortions are performed each year. This paper seeks to test the validity of this number. First, it provides an overview of what could have been the original source of this figure, and then it shows that this hasty calculation is inconsistent with a rigorous study of induced abortion made in 1992. Also, it analyses different sources of information that contradict those assessments; exposes the difficulties inherent in estimating the magnitude of illegal activities; and criticizes one methodology. Finally, it estimates the range of the number of annual abortions based on the Demographic and Health Surveys. [ABSTRACT FROM AUTHOR]

Economic and demographic growth in Colombia has been dominated by the largest cities. This has resulted in the common belief that Colombia is mainly an urban country. The aim of this paper is to show how economic and demographic growth has evolved, especially in terms of population density, since the mid-eighties. Using Markov transition chains and their spatial counterpart, we show that since the mid-eighties, municipalities have experienced a highly persistent pattern in which the main cities have maintained their position as the most densely populated. In contrast, municipalities that exhibited low levels of population density have remained relatively stagnant. [ABSTRACT FROM AUTHOR]

What do economists mean when they talk about 'capital accumulation'? Surprisingly, the answer is anything but clear. The conventional view is that there are two types of capital, real and financial; that these two capitals should correspond to one another; and that, unfortunately, most of the time they don't: in general, goes the argument, the growth of financial capital tends to mismatch and distort the accumulation of real capital. The paper shows this 'mismatch thesis' - and therefore the ability of economists to explain accumulation - to be built on foundations of sand. Economists, it argues, cannot measure real capital in the first place, and the proxies they devise for that purpose entangle them in logical circularities and empirical impossibilities. [ABSTRACT FROM AUTHOR]

This paper uses a new measure of financial development to show that many benefits in terms of growth and stability can still be reaped from further financial development in most emerging markets. First, it defines financial development as a combination of depth, access and efficiency. Second, it highlights that the economic growth weakens at higher levels of financial development. Third, it indicates that the pace of financial development matters. Forth, it provides a new angle related to the tradeoffs of financial regulation. Finally, it finds that there is no "one-size-fits-all" in the sequencing of developing financial institutions versus markets, though as economies evolve the relative benefits from institutions decline and those from markets increase. [ABSTRACT FROM AUTHOR]

This paper is a review of the notions of value in economics and anthropology. In this review, the greater difficulty has been, indeed, the historical separation between disciplines that frequently have developed their theoretical conceptualizations about economic fact separately, while the cooperation attempts have had to overcome important methodological and formal differences. However, the analysis of the main anthropological and economic contributions has shown the necessity to re-examine the foundations about value and to reflect on the use of this concept. [ABSTRACT FROM AUTHOR]

The analysis of innovative processes such as securitization leads to asking if the behavior of economic agents is a response to the institutional changes with specific objectives, or if the changes in the regulatory regime are the result of market behaviour or needs of the economy. The objective of this paper is to apply the theory of institutional change of North (agent, source, process and way of change) to examine the Colombian market in the period 1993-2013 in order to explore the main events which had an influence on the performance of securitization in general, and mortgage securitization in particular. [ABSTRACT FROM AUTHOR]

Cooperation among firms can be analyzed from different theoretical perspectives. The objective of this paper is to analyze firm networks from the perspective of team theory and club theory. Even though these theories are not recent in economics, using them as a theoretical framework for the characterization of firm networks could be a novel contribution. We can infer that aspects of both theories could be combined to explain cases of cooperation. [ABSTRACT FROM AUTHOR]

This paper is an approach to the study of the working poor in Colombia. The purpose is to analyze poverty linked to types of labor insertion, Using data from the Continuous Household Survey and the Large Integrated Household Survey, it analyses main poverty indicators for the workers, and poverty decomposition by geographical area between 2002 and 2012. In addition, it offers a socio-demographic and occupational characterization of the working poor, concluding that the composition of the labor market and the type of labor insertion are determinants of low income. [ABSTRACT FROM AUTHOR]

The paper presents a newly compiled and improved database of national household surveys between 1988 and 2008. In 2008, the global Gini index is at 70.5 percent having declined by approximately 2 Gini points over this twenty year period. When it is adjusted for the likely under-reporting of higher? incomes in surveys by using the gap between national accounts consumption and survey means in combination with a Pareto-type imputation of the upper tail, the estimate is a much higher global Gini of almost 76 percent. With such an adjustment the downward trend in the Gini almost disappears. Tracking the evolution of individual country- deciles shows the underlying elements that drive the changes in the global distribution: China left the bottom ranks, modifying the overall shape of the global income distribution in the process and creating an important global "median" class that transformed a twin-peaked 1988 global distribution into a single-peaked one. The "winners" were country-deciles which in 1988 stood at the median of the global income distribution, 90 percent of which are from Asia in terms of population. The "losers" were the country-deciles in 1988 were around the 85th percentile of the global income distribution, almost 90 percent of which are from mature economies in terms of population. [ABSTRACT FROM AUTHOR]

The 1949 World Bank mission headed by Lauchlin Currie recommended an integral attack on the interlocking vicious circles of underdevelopment through a widening of domestic and international markets and a reform of macroeconomic policy formulation. In 1950 Currie was invited by the Colombian Government to return as adviser to a new national planning board. In 1952 Albert Hirschman was also hired as an adviser to this board. This paper discusses the heated disagreements between these two distinguished economists, their influence on the theory and practice of economic development in Colombia and of the World Bank, and in particular their focus on planning based on an integral program versus individual project approaches to planning. [ABSTRACT FROM AUTHOR]

This paper proposes a new theoretical model to unerstand how defence and corruption networks associated to drug trafficking operate. Based on game theory and social network theory strategic interactions between drug dealers and their agents are analyzed. The model shows that network density is a main determinant of the survival probability of drug dealers and of wages paid to their security agents; and that the efficacy of law enforcement policies depends on network density. [ABSTRACT FROM AUTHOR]

Women population migrations are very significant in the broader international migration phenomenon, not only because of the number of people involved, but also because they have their own particular characteristics which distinguish them from male migrations. Gender perspective, being applied to migration studies, has been very useful in demonstrating that migration is a gendered phenomenon and it has added depth to the specific understanding of female migration. This article focuses on Colombian flows to Italy, a scarcely studied phenomenon with interesting particularities, such as: its strong heterogeneity, the high female presence, and the variety of itineraries female have. Framed within the gender perspective, this paper aims to observe the differences between men's and women's migration experiences, in order to define some of the gender inequalities and their intersection with other inequalities that arise from certain social categories involved during the migration. It focuses on the family, an important place of analysis since within it gender relations are expressed with great determination and at the same time it changes with migration, contributing to modify women's social and family status. Changes in gender relations do not point only in one direction in such flows, as women have different trajectories showing that they are often active, independent and autonomous actors, able to articulate advantages and disadvantages present during the migration process. [ABSTRACT FROM AUTHOR]

This article aims to understand the dynamics of the political transnationalism of Colombian migrants in New York City and the northern area of New Jersey during the 1990-2010 period from the processes of contempt and moral suffering (social stigmatization), the implications of these processes in the migrants' identity/autonomy (as generators of identity wounds) and their search for social recognition. The paper begins with a characterization of the Colombian migration to that setting. Then it shows the experiences of moral contempt faced by Colombian migrants in the contexts of origin and arrival. In the context of origin such experiences were linked to social and political polarization, violence, inequality and strong barriers to upward mobility, while in the context of arrival these experiences were related to the stigma of drug trafficking, the dynamics of cultural racism, discrimination because of low English proficiency, and the absence of a legal immigration status. Finally, the article discusses the participation and mobilization (mainly at informal and collective levels) of Colombian migrants in relation to the search for social recognition. [ABSTRACT FROM AUTHOR]

The objective of this paper is to explore the characteristics of populism from the experience of Ecuador, one of the countries in Latin America that has had more processes of this type. The idea is to identify similarities in the way that the populist style of leadership is exercised from four cases despite the existing differences between these political leaders: Jose Maria Velasco Ibarra, Abdala Bucaram Ortiz, Alvaro Noboa Ponton, and Rafael Correa. The argument is that, unlike the prevailing approaches in Ecuadorian literature, populism must be understood as a style of leadership that occurs between leader and follower, which has a series of characteristics that are maintained throughout time, regardless of the contextual and systematic differences. [ABSTRACT FROM AUTHOR]

For a number of years now, analyses of the political participation of women have warned of a very low presence of these in the various parliaments of the world. The diagnosis of female underrepresentation was a warning sign for different international organisms, which initiating from successive calls started to plan a review of the situation so that various countries would commit themselves to adopt measures to modify it. This paper has the goal of describing the current outlook of women and politics in Latin America, with special attention paid to the Colombian case, focusing fundamentally on the adoption of gender quotas as a strategy of positive discrimination that might contribute to a larger participation of women in the politics of the region. [ABSTRACT FROM AUTHOR]

In the late 1970s and early 1980s, Guatemala, El Salvador and Nicaragua underwent a series of internal conflicts, largely as a result of economic and social inequalities and repressive political regimes, fueled by the policies of the two main superpowers at the time. Since 1996 when the peace agreements were signed the presence of private security companies in Guatemala has increased significantly, given the climate of insecurity and demand for protection by society at large. The provision of security by the private sector is challenging the state's role as the main actor responsible for the security and safety of citizens and the protection of their assets. In the absence of an efficient legal system or regulatory structure, these private sector activities raise issues of legality, legitimacy, and accountability in the area of security policy. This paper seeks to analyze the state of control and supervision of the private sector in the field of public security in Guatemala. [ABSTRACT FROM AUTHOR]

This paper presents some theoretical components of comparative historical institutionalism components compared. It begins with an overview of the theory and the importance its followers give to institutions in the construction of the modern state, liberal democracy and economic development. Two analyses of Latin America are compared with Korea and Taiwan during the decades in which the development model predominated, while the second shows the progress undergone by the State in the region during the twentieth century. In addition to this, the return of the state is presented with a series of measures with a content that is different to its actions in Latin America is presented. Finally, some of the limitations of comparative historical institutionalism are shown to understand the region. [ABSTRACT FROM AUTHOR]

The Socialist Federal Republic of Yugoslavia began to disintegrate in 1991. Such a milestone in Europe resulted in the reconfiguration of borders and internal struggles. Where there had previously only been one independent state, six new ones were established. As a result, ethnic conflict emerged which brought forth questions regarding national movements. The objective of this paper is to question the adequacy of the constructivist approach in addressing this concern. An essential component to understanding the argument raised involves analyzing the political actors and, most importantly, the elite among them, who play a central role in their national identities. With this in mind, each case will be analyzed from a historical-comparative approach and aim to establish any similarities present among them. Rather than focusing on the inevitability of Yugoslavia's' break up, issues relating to circumstantial and identity formation will be discussed for each republic. [ABSTRACT FROM AUTHOR]

This paper inquires about the discourse of extractive development, which is facilitated by juridical frameworks of illegality. This discourse collides with views and practices of local development in the Remanso Chorrobocon Indigenous Mining Area. The theoretical framework intersects critical development studies, political ecology and legal pluralism. And the methodology complements media coverage, norms review, primary and secondary literature review, participant observation, and field work in Inirida and the Indigenous Mining Area. [ABSTRACT FROM AUTHOR]

This paper is intended to develop the construction of an alternative approach regarding the reality of mining in Colombia. In contrast to its stigmatization, this article highlights the existing potential of inhabitants of the mining territories. In order to do this, the starting point is the study of trust as a trigger for social change. Then, the generalities of the political economy of gold mining are described and the problem of the supplying of gold to jewelers is addressed, in order to propose cooperative solutions with economic and social benefits for the mining community. [ABSTRACT FROM AUTHOR]

This paper analyzes the political nature of taxation, which helps to explain why adoption from the model sponsored by the IMF in Latin America, especially after the debt crisis, has not been homogeneous. Colombia is taken as a case study to show how tax reforms depend on the political process in Congress, which opens a gap between the bills, inspired by IMF, and the final laws. Finally, it raises some arguments that suggest the special interests' role in the design and application of tax policy, which interact without being necessarily reconcilable and can also explain the divergence between bills and laws. [ABSTRACT FROM AUTHOR]

This paper analyzes the characteristics of job flows in the Colombian manufacturing sector between 1994 and 2009, at the industry group level and for the occupational categories. The results suggest high levels of job creation and job destruction in manufacturing firms, which are not usually evident in the figures of net employment growth. Similarly, we find that job creation and job destruction are persistent. Finally, the results at a disaggregated level indicate significant differences by industry group and occupational category. [ABSTRACT FROM AUTHOR]

Hirschman was a great social scientist who was committed to justice and democracy. This paper, a small homage in his memory, analyizes his most important book, The Strategy of Economic Development, and his reflections about late industrialization, inflation, balance of payment deficits, the linkage hypothesis, and relations between development theory and economic theory. [ABSTRACT FROM AUTHOR]

This paper examines the relationship between macroeconomic uncertainty, fiscal governance and economic growth in Venezuela from 1968 to 2010. There is feedback between fiscal volatility and uncertainty, but the latter may be the result of weak governance, particularly volatile fiscal policy. Fiscal volatility affects fiscal outcomes, especially when fiscal policy is discretionary. A VAR model is used to examine these results. [ABSTRACT FROM AUTHOR]

Thorstein Veblen (1857-1929) is one of the founders of American institutional economics. This paper aims to make a presentation of his theory of consumption and his theory of business cycles and crises, through an analytical reading of his works: The Theory of the Leisure Class and The Theory of Business Enterprise. In order to complete this analysis, we also make a general presentation of the author's thought and a brief systematization of his critique of orthodox economic thought. [ABSTRACT FROM AUTHOR]

The paper analyzes the changes occurred since the VI EU-LAC Summit, in Madrid in May 2010, on the relationship between the European Union and Latin America. A change continued with the Celac-EU Summit, held in January 2013, which presents evidence of bi-regional strategy and the full import of the most significant commitments to build that relationship: regional integration and social cohesion. Latin America and the European Union should strengthen their bond and extrapolate on other institutions and settings of the current post-Cold War geopolitical order. A scenario where they share views and concerns and whose response, in any case, must come from a joint position and shared perspective. [ABSTRACT FROM AUTHOR]

This paper presents the concept of negative campaigning, and discusses its risks and potentials as a political communication strategy. Then, a codification matrix is proposed which has been designed by integrating a set of variables, and its respective dimensions and indicators. The purpose was to generate a tool that would allow researchers to gain precision when analyzing any negative campaign as a study subject. [ABSTRACT FROM AUTHOR]

This paper explores the problem of the orchestration of communication, understood as the constant and systematic repetition of one or various issues by means of different propaganda tools, and its adecuation to diverse publics. In this case, the concepts are applied the electoral communication domain. For this purpose, three critical moments in the design of a general strategy of communication were selected. [ABSTRACT FROM AUTHOR]

We explore the traits that characterize the codes of conduct with the aim to understand the parameters of responsibility and ethical performance that Colombian oil companies define for themselves and for their stakeholders. The paper is exploratory and descriptive and uses the method of multiple case study. The codes are grouped in three blocks according to their structure. We show the philosophical roots of codes. codes of global companies are extensive and legal. Local companies with international ambition have less extensive codes, but maintain their legal nature. Codes of small local enterprises are short and mission-focused by this tone. Virtually all codes have their roots in utilitarian ethics. [ABSTRACT FROM AUTHOR]

This paper explores why the type of complex financial regulation developed over recent decades may be a suboptimal response to the increasing complexity of the financial system. Examples from other disciplines illustrate how decision-making in a complex environment can benefit from simple rules of thumb or 'heuristics'. We perform a set of empirical experiments to assess the relative performance of simple versus complex rules in a financial setting. We find that simple metrics, such as the leverage ratio and market-based measures of capital, outperform more complex risk-weighted measures and multiple-indicator models in their capacity to predict bank failure. A consistent message from these experiments is that complexity of models or portfolios can generate robustness problems. We outline five policy lessons from these findings, covering both the design of financial regulation itself and possible measures aimed at reducing complexity of the financial system more directly. [ABSTRACT FROM AUTHOR]

We explore the traits that characterize the codes of conduct with the aim to understand the parameters of responsibility and ethical performance that Colombian oil companies define for themselves and for their stakeholders. The paper is exploratory and descriptive and uses the method of multiple case study. The codes are grouped in three blocks according to their structure. We show the philosophical roots of codes. Codes of global companies are extensive and legal. Local companies with international ambitions have less extensive codes, but maintain their legal nature. Codes of small local enterprises are short and mission-focused by this tone. Virtually all codes have their roots in utilitarian ethics. [ABSTRACT FROM AUTHOR]

This paper explores why the type of complex financial regulation developed over recent decades may be a suboptimal response to the increasing complexity of the financial system. Examples from other disciplines illustrate how decision-making in a complex environment can benefit from simple rules of thumb or 'heuristics'. We perform a set of empirical experiments to assess the relative performance of simple versus complex rules in a financial setting. We find that simple metrics, such as the leverage ratio and market-based measures of capital, outperform more complex risk-weighted measures and multiple-indicator models in their capacity to predict bank failure. A consistent message from these experiments is that complexity of models or portfolios can generate robustness problems. We outline five policy lessons from these findings, covering both the design of financial regulation itself and possible measures aimed at reducing complexity of the financial system more directly. [ABSTRACT FROM AUTHOR]

Neuroeconomics gives a material foundation to economics. The basic framework of this paper is one that takes into account cognitive psychology, economics, biology and neuroscience in general. Specifically, it is a review of findings which aim to make explicit the idea that it is the body and brain that determine individual economic behaviour. In other words, decisions are a function of revealed biology. The basic hypothesis is that a rational organism must be consistent with its revealed biology. [ABSTRACT FROM AUTHOR]

This paper aims to study the differences in the degree of professionalization of teachers in Colombian educational institutions. We break down the inequalities in the supply of teachers according to their degree of professionalization using the Theil index. Next, we estimate the determinants of professionalization, taking into account characteristics of the school and the municipalities where the institutions operate. We evaluate two hypotheses: first, whether more public spending on education personnel by local authorities has helped to improve the level of teacher training in government institutions; and we assess the impact of the teacher professionalization law of 2002 on the degree of teacher professionalization. [ABSTRACT FROM AUTHOR]

In this paper, we build an index to measure the extent to which displaced households can effectively realize their economic and social rights. Based on the results of the index, we conclude that during the reparations and resettlement process, a displaced household, on average, is able to exercise 60% of the rights associated with economic and social stability. This result is four points below the average level at which poor nearby households are able to exercise their rights. Using panel data on a group of households, our technical work illustrates that between 2007 and 2008, the ability of displaced households to exercise their rights deteriorated to the point where, in effect, 45% of the households saw a regression in their ability to exercise at least one right during this period. We also identified other factors threatening the sustainability of the socio-economic stabilization policy, and some recommendations are made. [ABSTRACT FROM AUTHOR]

All economists should be conversant with "what happened?" during the financial crisis of 2007-2009. We select and summarize 16 documents, including academic papers and reports from regulatory and international agencies. This reading list covers the key facts and mechanisms in the build-up of risk, the panics in short-term-debt markets, the policy reactions, and the real effects of the financial crisis. [ABSTRACT FROM AUTHOR]

This paper contrasts the concept of a complex, adaptive agent with the idea of a programmed agent, and develops a new vision of agent learning and structure. The concept of the agent is analyzed through a consideration of internal models, practice, the concept of routine and its influence on the agent's behavior, and the importance of ex ante and ex post learning. Finally, it demonstrates how problem solving is subject to the restrictions of the agent, and describes the different ways to explore solutions space with three types of scanning: exhaustive, random and selective. [ABSTRACT FROM AUTHOR]

As an instrument of the Colombian market-led land reform, the Comprehensive Land Subsidy (SIT) provides for land entitlement to poor peasants and smallholders tied to the development of rural production projects, through a communal property regime in certain cases. Through the case study of Sandrana y Samaría, this paper seeks to analyze the extent to which this land reform instrument and its implementation conditions create the necessary framework for productive and community development based on the acquisition of a land title. To that end, the study focuses on the logic of the main aspects of this policy instrument in the context of the Colombian land reform policy. [ABSTRACT FROM AUTHOR]

This document explores various information theoretical concepts initially developed in physics and engineering and used today in many other fields. Information is defined as a quantity inversely proportional to the probability that an event happens and entropy is defined as the expected value of information. Some information applications in economics include Theil's inequality index, Akaike's information criterion, and the maximum entropy estimation method. Also, information theoretical concepts have been applied to the statistical analysis of financial data. This paper includes an empirical illustration relating to stock market price forecasting. [ABSTRACT FROM AUTHOR]

This paper analyses how the announcement of changes in corporate control (tender offer) of Endesa, Hidrocantábrico and Scottish Power have affected their stock prices and the impact that these events have on the stock market returns of competitors of the target firm. Using an "event study" methodology we find that takeovers positively and significantly affect, at the 1% level, the stock market return of the target firm. Results are robust across several econometric specifications such as GARCH and MCO models. Also, the results suggest the announcement of a tender offer positively and significantly affects the stock market return of the target firm's competitors. [ABSTRACT FROM AUTHOR]

In contracts for construction of public services infrastructure, the private sector has strong incentives to reduce costs over the life of the project, which affects the quality of service. This paper extends the Hart's model to evaluate the benefits of public-private partnership, examining different types of ownership and introducing a simple mechanism for renegotiation. The exercise shows that government involvement is not justified by its ability to make innovations in quality, but because it internalizes the costs and benefits of investment in cost reduction by the private sector. [ABSTRACT FROM AUTHOR]