Reputation effects in regulatory enforcement
نویسنده
چکیده
We show that, under plausible hypotheses, an enforcement agency without commitment power will not undertake any enforcement e ort at all in a static game. Indeed, punishment of noncompliant agents brings no social bene ts in itself. In a dynamic framework, however, the enforcement agency might inspect private agents in order to develop a reputation that it will inspect in the future. However small the private agents' prior beliefs that they will be inspected, the agency can obtain almost perfect compliance if the game lasts long enough. Our model with reputation e ects does however not converge to a model with perfect commitment. JEL Classi cation C72; K14; K32; K42 Corresponding address: Department of Economics and Management, Royal Military Academy, Avenue de la Renaissance 30, B 1000 Bruxelles, Belgium, Tel: 003227376457, Fax: 00227376212, e-mail: [email protected]
منابع مشابه
Regulatory Uncertainty and Corporate Responses to Environmental Protection in China
This article analyzes the closing gap between regulation and enforcement of environmental protection in China and explores its implications for doing business there. It identifies three major dimensions that characterize change in regulatory systems: priorities and incentives, bureaucratic alignment, and transparency and monitoring. Using these dimensions, it describes the mechanisms that chara...
متن کاملOn Reputation: A Microfoundation of Contract Enforcement and Price Rigidity
We study the impact of reputational incentives in markets characterized by moral hazard problems. Social preferences have been shown to enhance contract enforcement in these markets, while at the same time generating considerable wage and price rigidity. Reputation powerfully amplifies the positive effects of social preferences on contract enforcement by increasing contract efficiency substanti...
متن کاملPublished in the Journal of Environmental Economics & Management 50 ( 2005 ) : 519 - 540 ( with minor revisions ) Regulator Reputation , Enforcement , and Environmental Compliance
This paper explores empirically the impact of enforcement efforts on environmental compliance, focusing on the role of regulator reputation spillover effects. We find that, on the margin, the impact of a fine for water pollutant violations is about a two-thirds reduction in the statewide violation rate in the year following a fine. This large result obtains through the regulator’s enhanced repu...
متن کاملFirms, Courts, and Reputation Mechanisms: towards a Positive Theory of Private Ordering
This Essay formulates a positive model that predicts when commercial parties will employ private ordering to enforce their agreements. The typical enforcement mechanism associated with private ordering is the reputation mechanism, in which a merchant community punishes parties in breach of contract by denying them future business. The growing private ordering literature argues that these privat...
متن کاملThe Value of Employer Reputation in the Absence of Contract Enforcement: A Randomized Experiment
In two experiments, we examine the effects of employer reputation in Amazon Mechanical Turk, an online labor market in which employers may decline to pay workers while keeping the work product. In the first experiment, a research assistant who is blinded to reputation performs tasks posted by employers with good, bad, or no online reputations. Results confirm the value of reputation; due to sho...
متن کامل