What would government need to do to prevent such a problem


Moral hazard

Suppose the Sri Lanka government awarded contracts to private companies to rebuild the countryâ??s infrastructure damaged by the tsunami and it based its contracts on a percentage of the cost of the reconstruction. Would this constitute a moral hazard? If so, what would the government need to do to prevent such a problem?

 

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Business Economics: What would government need to do to prevent such a problem
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