Regional application of information asymmetry

by Michal ŠULC

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JEL classification

  • Regional Government Analysis: General
  • Asymmetric and Private Information; Mechanism Design

Keywords

Information asymmetry, market failures, regional self-government, regions

Abstract

The subject of this article is the information asymmetry in the area of regional management. The aim of the Author is to discuss the significance of the information asymmetry for the regional government at the level of Czech regions. On the basis of present competences and powers of regional self-governments the main areas of the information asymmetry presence are identified. Possibilities of regional self-government how to eliminate the information asymmetry in the regions are discussed. First of all, there is the principal-agent problem. The regional self-government is partly the agent of local people and partly the principal in relation to its allowance organizations. Furthermore, the information asymmetry is also present in the grants providing and it is asymmet-ric information of the grant recipients’ qualities. The asymmetric information is evident in some types of goods and services provided by regional self-government, especially in the education and health care systems. Within the detached powers, the regional self-government has instruments to eliminate the information asymmetry in the private agents’ market relations in the region.