Reputation effects in regulatory enforcement

Laurent Franckx

Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment

Abstract: We show that, under plausible hypotheses, an enforcement agency without commitment power will not undertake any enforcement effort at all in a static game. Indeed, punishment of noncompliant agents brings no social benefits 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 effects does however not converge to a model with perfect commitment.

JEL-codes: C72 K14 K32 K42 (search for similar items in EconPapers)
Pages: 35 pages
Date: 2001-02
New Economics Papers: this item is included in nep-ene, nep-ent, nep-law and nep-net
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://feb.kuleuven.be/drc/Economics/misc/ete_workingpapers/ete-wp01-07.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ete:etewps:ete0107

Access Statistics for this paper

More papers in Energy, Transport and Environment Working Papers Series from KU Leuven, Department of Economics - Research Group Energy, Transport and Environment Contact information at EDIRC.
Bibliographic data for series maintained by library EBIB ().