Inspection Intensity and Market Structure

Stéphan Marette ()

Food and Agricultural Policy Research Institute (FAPRI) Publications (archive only) from Center for Agricultural and Rural Development (CARD) at Iowa State University

Abstract: An investigation of financing an inspection policy while allowing the enforcement of a market regulation is described. A simple model shows that the intensity of controls depends on the market structure. Under a given number of firms, the per-firm probability of controls is lower than one, since firms' incentive to comply with regulation holds under positive profits. In this case, a lump-sum tax is used for limiting distortions coming from financing with a fixed fee. Under free entry, the per-firm probability of controls is equal to one, and only a fixed fee that prevents excess entry is used to finance inspection.

Keywords: inspection policies; market regulation; regulatory funding. (search for similar items in EconPapers)
Date: 2005-10
New Economics Papers: this item is included in nep-acc
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Related works:
Working Paper: Inspection Intensity and Market Structure (2005)
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Persistent link: https://EconPapers.repec.org/RePEc:ias:fpaper:05-wp412

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