The public management of risk: Separating ex ante and ex post monitors
When a firm undertakes risky activities, the conflict between social and private incentives to exercise safety care requires public intervention. This control takes the form of both monetary incentives but also monitoring taking place either ex ante or ex post, i.e. before or after an accident occurs. We delineate the respective scopes of these monitoring activities when public monitors are either benevolent or corruptible. Separation between the ex ante and the ex post monitors helps to prevent capture, increases the likelihood of ex post investigation and improves welfare.
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- Faure-Grimaud Antoine & Laffont Jean-Jacques & Martimort David, 2003.
"Risk Averse Supervisors and the Efficiency of Collusion,"
The B.E. Journal of Theoretical Economics,
De Gruyter, vol. 2(1), pages 1-32, January.
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- Marcel Boyer & Donatella Porrini, 2000. "Law versus Regulation: A Political Economy Model of Instrument Choice in Environmental Policy," CIRANO Working Papers 2000s-57, CIRANO.
- Faure-Grimaud, Antoine & Martimort, David, 2003. " Regulatory Inertia," RAND Journal of Economics, The RAND Corporation, vol. 34(3), pages 413-37, Autumn.
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