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Yardstick Competition, Performance Evaluation, and the Efficient Provision of Local Public Goods

Yasuyuki Nishigaki 1, Hideki Nishimoto 1, Naoya Yasugi 1, Yuzo Higashi 2, Wong Meng Seng 3
1. Faculty of Economics, Ryukoku University, Kyoto, Japan
2. Kobe City University of Foreign Studies, Kobe, Japan
3. University of Nottingham Malaysia Campus, Selangor, Malaysia

Abstract—This paper investigated performance evaluation from the point of view of inter-governmental competition and proposed an effective method to apply yardstick evaluation for regulating natural monopoly to evaluate local governmental performance. By using a yardstick competition model in which residents make contract with an incumbent governor under asymmetric information, it is indicated that an incentive contract using yardstick evaluation may attain the optimal of full information equilibrium. A preliminary empirical test which supports the theoretical results is conducted by using international data.

Index Terms—yardstick evaluation, performance evaluation, yardstick competition, e-government, agency problems

Cite: Yasuyuki Nishigaki, Hideki Nishimoto, Naoya Yasugi, Yuzo Higashi, and Wong Meng Seng, "Yardstick Competition, Performance Evaluation, and the Efficient Provision of Local Public Goods," Journal of Advanced Management Science, Vol. 4, No. 2, pp. 141-145, March 2016. doi: 10.12720/joams.4.2.141-145
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