PUBLIC-SERVICES AND THE THEORY OF REGULATION

This paper examines how principal-agent theory, as used in the industr ial regulation literature, might be useful in analysing the organisati on and provision of public services and to evaluate recent reforms. An exposition of the key issues in regulation is provided, at a fairly i ntuitive level, and brief examples illustrate how these might be relev ant to public service provision such as education and health services. It is argued that principal-agent theory provides a useful framework of analysis for such studies.