Abstract: A model of principal-agent theory between government and the Application Service Provider(ASP) is proposed. It is proved through the game analysis that the government fee policy to ASPs is the key reason to keep the better relationship with ASPs. The incentive mechanisms under the conditions of information symmetry, the fixed fee paid by government branches, and information asymmetry were analyzed。 These incentive mechanisms would make ASP provide E-government services with high efficiency so that government and ASP could have a victory for both sides.

Key words: E-government, ASP, principal－agent, game theoty, IT outsourcing