Analysis of principal-agent relationship in Slovenian water and wastewater management

Veronika Petkovšek, Nevenka Hrovatin, Primož Pevcin

Article ID: 3801
Vol 8, Issue 6, 2024

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Abstract


The paper at hand analyses the principal-agent relationship, where comparative perspective between principals’ (municipalities) and agents’ (public utility providers) in the field of water and wastewater management is scrutinized. The goal of the paper is twofold: firstly, to present empirical results validating principal-agent relationships that emerged due to the reorganization process of public enterprises; secondly, to highlight the similarities and differences between the perspectives of principals and agents regarding motives, advantages and disadvantages, and price-setting in relation to the reorganization process. The empirical research is based on the primary data collected through two self-prepared and structured online questionnaires—one for municipalities, and the other for public utility providers. The results reveal similarities between public enterprises and municipalities in motivating factors for full municipal ownership. However, differences are seen among the advantages of the reorganization process. Price-setting by public utilities is recognized as a motivating mechanism for agents.


Keywords


principal-agent theory; local public utilities; public enterprise; water and wastewater industry

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DOI: https://doi.org/10.24294/jipd.v8i6.3801

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