An Empirical Examination of Moral Hazard in the Vehicle Inspection Market
AbstractMoral hazard arises in "diagnosis-cure" markets such as auto repair and health care when sellers have an incentive to misrepresent a buyer's condition in order to increase demand for the treatments they supply. This article examines the market for California vehicle emission inspections. Using transaction-level data, I investigate whether the market provides incentives that lead inspectors to help vehicles pass and how the behavior of inspectors varies with their firm's organizational characteristics. I find that consumers are generally able to provide firms and inspectors incentives to help them pass, and I find cross-firm differences that are consistent with agency theory.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 29 (1998)
Issue (Month): 2 (Summer)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Harrington, Winston & McConnell, Virginia, 1999. "Coase and Car Repair: Who Should Be Responsible for Emissions of Vehicles in Use?," Discussion Papers dp-99-22, Resources For the Future.
- Steven D. Levitt & Chad Syverson, 2005.
"Market Distortions when Agents are Better Informed: The Value of Information in Real Estate Transactions,"
NBER Working Papers
11053, National Bureau of Economic Research, Inc.
- Steven D. Levitt & Chad Syverson, 2008. "Market Distortions When Agents Are Better Informed: The Value of Information in Real Estate Transactions," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 599-611, November.
- Dimitrios Varvarigos, 2013. "Economic Growth, Health, and the Choice of Polluting Technologies: The Role of Bureaucratic Corruption," Discussion Papers in Economics 13/22, Department of Economics, University of Leicester.
- Eleni Stathopoulou & Dimitrios Varvarigos, 2013. "Corruption, Entry and Pollution," Discussion Papers in Economics 13/21, Department of Economics, University of Leicester.
- Uwe Dulleck & David Johnston & Rudolf Kerschbamer & Matthias Sutter, 2012.
"The good, the bad and the naive: Do fair prices signal good types or do they induce good behaviour?,"
2012-03, Faculty of Economics and Statistics, University of Innsbruck.
- Dulleck, Uwe & Johnston, David W. & Kerschbamer, Rudolf & Sutter, Matthias, 2012. "The Good, the Bad and the Naive: Do Fair Prices Signal Good Types or Do They Induce Good Behaviour?," IZA Discussion Papers 6491, Institute for the Study of Labor (IZA).
- Uwe Dulleck & David Johnston & Rudolf Kerschbamer & Matthias Sutter, 2012. "The Good, the Bad and the Naive: Do fair prices signal good types or do they induce good behaviour?," NCER Working Paper Series 81, National Centre for Econometric Research.
- Christopher C. Afendulis & Daniel P. Kessler, 2006. "Tradeoffs from Integrating Diagnosis and Treatment in Markets for Health Care," NBER Working Papers 12623, National Bureau of Economic Research, Inc.
- Ando, Amy & Harrington, Winston & McConnell, Virginia D., 2007. "Fees in an Imperfect World: An Application to Motor Vehicle Emissions," Discussion Papers dp-07-34, Resources For the Future.
- Andrew Epstein & Jonathan D. Ketcham & Sean Nicholson, 2008. "Professional Partnerships and Matching in Obstetrics," NBER Working Papers 14070, National Bureau of Economic Research, Inc.
- Wayne Dunham, 2003. "Moral Hazard and the Market for Used Automobiles," Review of Industrial Organization, Springer, vol. 23(1), pages 65-83, August.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.