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Corporate Design for Regulability. A Principal-Agent-Supervisor Model

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Engel,  Christoph
Max Planck Institute for Research on Collective Goods, Max Planck Society;

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Citation

Engel, C. (2005). Corporate Design for Regulability. A Principal-Agent-Supervisor Model.


Cite as: http://hdl.handle.net/11858/00-001M-0000-0028-6D6D-0
Abstract
Corporate actors differ from individuals in one important respect: technically, it may be possible to observe the formation of the corporate will from outside, and to impact on its formation. This feature can be exploited by regulators. One technology is inducing corporate actors to hire an interface actor, representing the regulatory cause at the interior of the firm. Regulators are corporate actors as well. Statutes usually do not fully determine their behaviour. Therefore, firms may induce the regulator to give an interface actor access to the regulatory arena. This interface actor has the task of representing the commercial cause in regulatory decision-making. The paper uses a principal-agent-supervisor model to analyse each of these cases separately, and to demonstrate how the reciprocal nature of the relationship may be exploited.