The Desirability of forgiveness in regulatory enforcement

Arun Malik

Journal of Regulatory Economics, 2014, vol. 46, issue 1, 22 pages

Abstract: I present a model that explains two common features of regulatory enforcement: selective forgiveness of noncompliance, and the collection of information on a firm’s compliance activities and not just its compliance status. I show that forgiving noncompliance is optimal if the information on a firm’s compliance activities constitutes sufficiently strong evidence of the firm having exerted a high level of compliance effort. The key benefit of forgiving noncompliance is a reduction in the probability with which the firm needs to be monitored. Copyright Springer Science+Business Media New York 2014

Keywords: Enforcement of regulation; Selective enforcement; Forgiving noncompliance; Harrington paradox; L51; K42; K32; D86 (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (5)

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DOI: 10.1007/s11149-014-9254-y

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