Reputation, control rights and game equilibrium -A game analytical framework and application to SOEs in China
LI Junlin , LI TianyouSchool of Economics, Renmin University of China, Beijing 100872, China
Front. Econ. China ›› 2008, Vol. 3 ›› Issue (4) : 513 -530.
Reputation, control rights and game equilibrium -A game analytical framework and application to SOEs in China
Using the reputation model of Kreps (1982), Vickers (1986) and Barro(1986), we develop a dynamic game model with incomplete information to examine the relations between the managers of state-owned enterprises(SOEs) in China and the government as the enterprise’s owner. Employing the model, we show that even a noncoopertive manager will not intrude the owner’s interests until the last period of his term in order to maximize his long term utility. The paper also discusses some phenomenona in state-owned enterprises in China, such as “insiders’ control”, “59 phenomenon” and excess on-the-job consumption.
reputation / control rights / SOEs / equilibrium
Higher Education Press and Brill
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