Agency Problems in Law Enforcement: Theory and Application to the U.S. Coast Guard

Kishore Gawande and Alok Bohara

Law and Economics from University Library of Munich, Germany

Abstract: We study two issues in the enforcement of public law. The first is whether the system of inspections and penalties set by the regulator is effective. The second is whether a better system of inspections and penalties can be designed, given the institutional constraints under which the regulator must function. We study these issues in the context of oil spill prevention activities of the U.S. Coast Guard (USCG), the agency entrusted with the enforcement of maritime pollution laws. A theoretically optimal contract that mixes penalties based on the amount of pollution ex post with penalties based on the extent of non- compliance ex ante is derived. The effectiveness of USCG inspections and penalties in reducing oil spills is then econometrically studied using micro-level data on a panel of US flag tank vessels. Whether the optimal penalty can potentially improve the effectiveness of compliance inspections in reducing oil spills is examined in the light of the empirical results and recent developments in the economics and public management literature on effective incentive contracting. Among our findings is the potential for combining unilateral incentive-based methods with cooperative methods based on reciprocity in order to solve the complex problem of law enforcement.

Keywords: Violations; Optimal Penalty; Micro-Panel Data; Oil Spills; Public Policy. (search for similar items in EconPapers)
JEL-codes: K (search for similar items in EconPapers)
Pages: 36 pages
Date: 2005-05-03
New Economics Papers: this item is included in nep-law
Note: Type of Document - pdf; pages: 36
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (14)

Downloads: (external link)
https://econwpa.ub.uni-muenchen.de/econ-wp/le/papers/0505/0505001.pdf (application/pdf)

Related works:
Journal Article: Agency Problems in Law Enforcement: Theory and Application to the U.S. Coast Guard (2005)
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:wpa:wuwple:0505001

Access Statistics for this paper

More papers in Law and Economics from University Library of Munich, Germany
Bibliographic data for series maintained by EconWPA ( this e-mail address is bad, please contact ).