Optimal failure rates and penalty-bonus policies in the offshore petroleum sector

Eirik Amundsen

Environmental & Resource Economics, 1992, vol. 2, issue 5, 469-489

Abstract: We characterize optimal time profiles of risk-reducing expenditures and wreck probabilities for petroleum platforms. The input to our analysis is the development of wreck cost, direct and imputed. Particular attention is paid to the question of how private companies deviating from socially optimal standards may be induced to comply with such standards by means of a) a time-variant penalty, b) a no-wreck bonus and c) a time-invariant penalty. Copyright Kluwer Academic Publishers 1992

Keywords: Petroleum-production; failure rates; penalty-bonus policies (search for similar items in EconPapers)
Date: 1992
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DOI: 10.1007/BF00376830

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