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The public management of risk: Separating ex ante and ex post monitors

  • Yolande Hiriart

    (LERNA - Economie des Ressources Naturelles - INRA - Institut National de la Recherche Agronomique - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - UT1 - Université Toulouse 1 Capitole, TSE - Toulouse School of Economics - Toulouse School of Economics, IDEI - Institut d'économie industrielle - UT1 - Université Toulouse 1 Capitole)

  • David Martimort

    (TSE - Toulouse School of Economics - Toulouse School of Economics, IDEI - Institut d'économie industrielle - UT1 - Université Toulouse 1 Capitole, GREMAQ - Groupe de recherche en économie mathématique et quantitative - UT1 - Université Toulouse 1 Capitole - INRA - Institut National de la Recherche Agronomique - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • Jérôme Pouyet

    (PSE - Paris School of Economics, PSE - Paris-Jourdan Sciences Economiques - CNRS - Centre National de la Recherche Scientifique - EHESS - École des hautes études en sciences sociales - ENS Paris - École normale supérieure - Paris - École des Ponts ParisTech (ENPC))

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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