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Inspection Regimes and Regulatory Compliance: How Important is the Element of Surprise?


  • Makofske, Matthew


Regulatory compliance is often promoted via unannounced inspections where firms found to be in violation of environmental, health, or safety regulations face punishments. When compliance is costly to firms, a key aspect of this approach is that the timing of inspections is unannounced and difficult to anticipate, lest firms comply only when they believe an inspection is likely. With data from Los Angeles (LA) County food-service health inspections, I estimate how the (in)ability to anticipate inspection timing affects compliance using a novel approach. Many facilities such as hotels, grocery stores, or food courts, consist of multiple food-service establishments sharing a single physical location. Multiple establishments within a single facility are commonly, though not always, inspected on the same day, meaning all but one of the establishments involved likely anticipate the timing of their next inspection to a considerable extent. Within such facilities, I show that establishments perform significantly worse on days in which they receive the sole inspection conducted at their facility. These "surprise" inspections detect 7.75% more violations, 9.1% more inspection score point deductions, and 16.3% more major critical violations (the most severe violations of the county health code).

Suggested Citation

  • Makofske, Matthew, 2018. "Inspection Regimes and Regulatory Compliance: How Important is the Element of Surprise?," MPRA Paper 88318, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:88318

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    References listed on IDEAS

    1. Kjetil Telle, 2009. "The threat of regulatory environmental inspection: impact on plant performance," Journal of Regulatory Economics, Springer, vol. 35(2), pages 154-178, April.
    2. A. Colin Cameron & Jonah B. Gelbach & Douglas L. Miller, 2011. "Robust Inference With Multiway Clustering," Journal of Business & Economic Statistics, Taylor & Francis Journals, vol. 29(2), pages 238-249, April.
    3. Ginger Zhe Jin & Jungmin Lee, 2018. "A Tale of Repetition: Lessons from Florida Restaurant Inspections," Journal of Law and Economics, University of Chicago Press, vol. 61(1), pages 159-188.
    4. Ginger Zhe Jin & Jungmin Lee, 2014. "Inspection technology, detection, and compliance: evidence from Florida restaurant inspections," RAND Journal of Economics, RAND Corporation, vol. 45(4), pages 885-917, December.
    5. Esther Duflo & Michael Greenstone & Rohini Pande & Nicholas Ryan, 2018. "The Value of Regulatory Discretion: Estimates From Environmental Inspections in India," Econometrica, Econometric Society, vol. 86(6), pages 2123-2160, November.
    6. Gray, Wayne B. & Deily, Mary E., 1996. "Compliance and Enforcement: Air Pollution Regulation in the U.S. Steel Industry," Journal of Environmental Economics and Management, Elsevier, vol. 31(1), pages 96-111, July.
    7. Eckert, Heather, 2004. "Inspections, warnings, and compliance: the case of petroleum storage regulation," Journal of Environmental Economics and Management, Elsevier, vol. 47(2), pages 232-259, March.
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    Cited by:

    1. Makofske, Matthew, 2020. "Spoiled Food and Spoiled Surprises: Inspection Anticipation and Regulatory Compliance," MPRA Paper 100870, University Library of Munich, Germany.

    More about this item


    regulatory inspection; health and safety regulation; monitoring; restaurant hygiene;

    JEL classification:

    • K32 - Law and Economics - - Other Substantive Areas of Law - - - Energy, Environmental, Health, and Safety Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
    • Q18 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Agriculture - - - Agricultural Policy; Food Policy

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