Welfare enhancing regulation exemptions

Murat C. Mungan

International Review of Law and Economics, 2011, vol. 31, issue 4, 249-255

Abstract: Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters low-risk entities and under-deters high-risk entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices, although they remain liable for any harm they cause.

Keywords: Exemptions; Regulations; Optimal deterrence (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:irlaec:v:31:y:2011:i:4:p:249-255

DOI: 10.1016/j.irle.2011.06.002

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