THE MULTIPRINCIPAL NATURE OF GOVERNMENT

One of the theoretical tools required to open the black box of the gov ernment organization is the theory of multiprincipals which describes how different incentive mechanisms compete with each others. In viewin g the set of relationships between several government bodies and the e ntities they regulate as a set of competing contracts in which the con trol of the regulatory process is shared amongst these different regul ators, we can address the question of the costs and the possible benef its of such structural separation. First, this paper surveys the previ ous literature on the topic. Then it traces out the possible benefits of such structures to the non-benevolence of regulators. We discuss al so how regulatory rights of control and communication channels must be designed all together to deal with this problem.