We make a positive analysis of the impact of market structure and political preferences on a (local) government's decision to privatize a given service using the framework of Hart, Shleifer and Vishny (1997). We argue that although outsourcing is more attractive when the private market is...

Adaptive contracting occurs when a principal experiments with the delegation of authority through leaving contracts incomplete. We highlight two potential benefits of adaptive contracting: First, the delegation of authority can be advantageous even if the agent acts opportunistically, since...