The Financing of Regulatory Agencies

Stéphan Marette () and John Crespi

Journal of Regulatory Economics, 2005, vol. 27, issue 1, 95-113

Abstract: This paper examines the financing of monitoring agencies deriving the welfare-improving combinations of public revenue, industry fees, and penalties that should be used to finance quality regulations. The model shows that if some firms are not expected to comply with quality standards, penalties are optimal to cover the agency’s regulatory exposure though these need to be augmented with other instruments as monitoring costs increase. If all firms are expected to comply with the quality standards, a per-firm fee is the optimal method of regulatory financing but needs to be augmented with a lump-sum tax as monitoring costs increase. Copyright Springer Science+Business Media, Inc. 2005

Keywords: regulation; financing; compliance (search for similar items in EconPapers)
Date: 2005
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Citations: View citations in EconPapers (5)

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Working Paper: The financing of regulatory agencies (2005)
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DOI: 10.1007/s11149-004-4421-1

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