IDEAS home Printed from https://ideas.repec.org/p/cdi/wpaper/1115.html
   My bibliography  Save this paper

Mutual Supervision in Preshipment Inspection Programs

Author

Listed:
  • Grégoire ROTA-GRAZIOSI

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Anne-Marie GEOURJON

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

  • Vianney DEQUIEDT

    () (Centre d'Etudes et de Recherches sur le Développement International(CERDI))

Abstract

Preshipment inspection programs are implemented in many developing countries to fight customs corruption. They consist in delegating the inspection of imports to a private firm that operates in the exporting country. To study those PSI programs, we develop a hierarchical agency model where the government authority can rely on two supervisors, namely the private inspection firm and the customs administration, to control importers' declarations. The government's optimal program is fully characterized. We devote some attention to the optimal inspection policy and its comparative statics properties. In particular, we identify the situations in which PSI programs are optimal. Our results highlight the fact that implementing PSI programs both to fight corruption and to modernize customs is inconsistent. We also discuss the optimal reconciliation policy, i.e. what to do in case of conflicting inspection reports by the private firm and the customs administration. In the optimal mechanism, mutual supervision between the private firm and the customs administration is used to provide adequate incentives to all parties.

Suggested Citation

  • Grégoire ROTA-GRAZIOSI & Anne-Marie GEOURJON & Vianney DEQUIEDT, 2009. "Mutual Supervision in Preshipment Inspection Programs," Working Papers 200910, CERDI.
  • Handle: RePEc:cdi:wpaper:1115
    as

    Download full text from publisher

    File URL: http://publi.cerdi.org/ed/2009/2009.10.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mishra, Ajit & Anant, T.C.A., 2006. "Activism, separation of powers and development," Journal of Development Economics, Elsevier, vol. 81(2), pages 457-477, December.
    2. Raymond Fisman & Shang-Jin Wei, 2004. "Tax Rates and Tax Evasion: Evidence from "Missing Imports" in China," Journal of Political Economy, University of Chicago Press, vol. 112(2), pages 471-500, April.
    3. Kofman, Fred & Lawarree, Jacques, 1996. "On the optimality of allowing collusion," Journal of Public Economics, Elsevier, vol. 61(3), pages 383-407, September.
    4. Patrick Bolton & Mathias Dewatripont, 2005. "Contract Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262025760, January.
    5. Kofman, Fred & Lawarree, Jacques, 1996. "A prisoner's dilemma model of collusion deterrence," Journal of Public Economics, Elsevier, vol. 59(1), pages 117-136, January.
    6. Pritchett, Lant & Sethi, Geeta, 1994. "Tariff Rates, Tariff Revenue, and Tariff Reform: Some New Facts," World Bank Economic Review, World Bank Group, vol. 8(1), pages 1-16, January.
    7. John S. Wilson & Catherine L. Mann & Tsunehiro Otsuki, 2005. "Assessing the Benefits of Trade Facilitation: A Global Perspective," The World Economy, Wiley Blackwell, vol. 28(6), pages 841-871, June.
    8. Roland Strausz, 1997. "Delegation of Monitoring in a Principal-Agent Relationship," Review of Economic Studies, Oxford University Press, vol. 64(3), pages 337-357.
    9. De Wulf, Luc, 1981. "Statistical analysis of under- and overinvoicing of imports," Journal of Development Economics, Elsevier, vol. 8(3), pages 303-323, June.
    10. Bac, Mehmet & Bag, Parimal Kanti, 2006. "Beneficial collusion in corruption control: The case of nonmonetary penalties," Journal of Development Economics, Elsevier, vol. 81(2), pages 478-499, December.
    11. Fahad Khalil, 1997. "Auditing Without Commitment," RAND Journal of Economics, The RAND Corporation, vol. 28(4), pages 629-640, Winter.
    12. Dean Yang, 2008. "Can Enforcement Backfire? Crime Displacement in the Context of Customs Reform in the Philippines," The Review of Economics and Statistics, MIT Press, vol. 90(1), pages 1-14, February.
    13. Hoekman, Bernard & Nicita, Alessandro, 2011. "Trade Policy, Trade Costs, and Developing Country Trade," World Development, Elsevier, vol. 39(12), pages 2069-2079.
    14. Njinkeu, Dominique & S. Wilson, John & Powo Fosso, Bruno, 2008. "Expanding Trade within Africa: The Impact of Trade Facilitation," Policy Research Working Paper Series 4790, The World Bank.
    15. Kofman, Fred & Lawarree, Jacques, 1993. "Collusion in Hierarchical Agency," Econometrica, Econometric Society, vol. 61(3), pages 629-656, May.
    16. Anson Jose & Cadot Olivier & Olarreaga Marcelo, 2006. "Tariff Evasion and Customs Corruption: Does Pre-Shipment Inspection Help?," The B.E. Journal of Economic Analysis & Policy, De Gruyter, vol. 5(1), pages 1-26, December.
    17. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics, and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
    18. Besley, Timothy & McLaren, John, 1993. "Taxes and Bribery: The Role of Wage Incentives," Economic Journal, Royal Economic Society, vol. 103(416), pages 119-141, January.
    19. Anne-Marie GEOURJON & Bertrand LAPORTE, 2004. "Risk Management for Targeting Customs Controls in Developing Countries: A Risky Venture for Revenue Performance?," Working Papers 200416, CERDI.
    20. Dean Yang, 2008. "Integrity for Hire: An Analysis of a Widespread Customs Reform," Journal of Law and Economics, University of Chicago Press, vol. 51(1), pages 25-57, February.
    21. Johnson, Noel, 2001. "Committing to civil service reform : the performance of pre-shipment inspection under different institutional regimes," Policy Research Working Paper Series 2594, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bertrand LAPORTE & Anne-Marie GEOURJON & Massene GADIAGA & Ousmane COUNDOUL, 2012. "Contrôler moins pour contrôler mieux : L’utilisation du data mining pour la gestion du risque en douane," Working Papers 201206, CERDI.
    2. Cyril Chalendard, 2015. "Use of internal information, external information acquisition and customs underreporting," Working Papers halshs-01179445, HAL.
    3. Ousmane COUNDOUL & Massene GADIAGA & Anne-Marie GEOURJON & Bertrand LAPORTE, 2012. "Inspecting less to inspect better: The use of data mining for risk management by customs administrations," Working Papers P46, FERDI.
    4. Kambale Mirembe, Omer, 2013. "Customs reforms in eastern Congo (DRC): Between norms and practices," IOB Working Papers 2013.04, Universiteit Antwerpen, Institute of Development Policy (IOB).
    5. Gilles Montagnat-Rentier & Gilles Parent, 2012. "Customs Administration Reform and Modernization in Francophone Sub-Saharan Africa, 1995–2010," IMF Working Papers 12/259, International Monetary Fund.
    6. Mario MANSOUR & Grégoire ROTA-GRAZIOSI, 2013. "Tax coordination, tax competition, and revenue mobilization in the west african economic and monetary union," Working Papers P81, FERDI.

    More about this item

    Keywords

    Preshipment inspection; Mutual supervision; Corruption; Customs administration.;

    JEL classification:

    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Comparison of Public and Private Enterprise and Nonprofit Institutions; Privatization; Contracting Out

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdi:wpaper:1115. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Vincent Mazenod). General contact details of provider: http://edirc.repec.org/data/ceauvfr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.