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Agency Problems in Law Enforcement: Theory and Application to the U.S. Coast Guard

Author

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  • kishore gawande

    (texas A&M)

  • alok k. bohara

    (u. new mexico)

Abstract

We study two issues in the enforcement of public law. The first is whether the system of inspections and penalties set by the regulator is effective. The second is whether a better system of inspections and penalties can be designed, given the institutional constraints under which the regulator must function. We study these issues in the context of oil spill prevention activities of the U.S. Coast Guard (USCG), the agency entrusted with the enforcement of maritime pollution laws. A theoretically optimal contract that mixes penalties based on the amount of pollution ex post with penalties based on the extent of non- compliance ex ante is derived. The effectiveness of USCG inspections and penalties in reducing oil spills is then econometrically studied using micro-level data on a panel of US flag tank vessels. Whether the optimal penalty can potentially improve the effectiveness of compliance inspections in reducing oil spills is examined in the light of the empirical results and recent developments in the economics and public management literature on effective incentive contracting. Among our findings is the potential for combining unilateral incentive-based methods with cooperative methods based on reciprocity in order to solve the complex problem of law enforcement.

Suggested Citation

  • kishore gawande & alok k. bohara, 2005. "Agency Problems in Law Enforcement: Theory and Application to the U.S. Coast Guard," Law and Economics 0505001, University Library of Munich, Germany.
  • Handle: RePEc:wpa:wuwple:0505001
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    References listed on IDEAS

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    Cited by:

    1. Vollaard, Ben, 2017. "Temporal displacement of environmental crime: Evidence from marine oil pollution," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 168-180.
    2. Motta, Alberto & Burlando, Alfredo, 2007. "Self reporting reduces corruption in law enforcement," MPRA Paper 5332, University Library of Munich, Germany, revised 23 Jun 2007.
    3. Maria R. Ibanez & Michael W. Toffel, 2020. "How Scheduling Can Bias Quality Assessment: Evidence from Food-Safety Inspections," Management Science, INFORMS, vol. 66(6), pages 2396-2416, June.
    4. Ralf Elbert & Holger Pontow & Alexander Benlian, 0. "The role of inter-organizational information systems in maritime transport chains," Electronic Markets, Springer;IIM University of St. Gallen, vol. 0, pages 1-17.
    5. Juergen Jung & Michael D. Makowsky, 2012. "Regulatory Enforcement, Politics, and Institutional Distance: OSHA Inspections 1990-2010," Working Papers 2012-02, Towson University, Department of Economics, revised Apr 2013.
    6. Michael W. Toffel & Jodi L. Short, 2011. "Coming Clean and Cleaning Up: Does Voluntary Self-Reporting Indicate Effective Self-Policing?," Journal of Law and Economics, University of Chicago Press, vol. 54(3), pages 609-649.
    7. Vollaard, Ben, 2017. "Temporal displacement of environmental crime: Evidence from marine oil pollution," Journal of Environmental Economics and Management, Elsevier, vol. 82(C), pages 168-180.
    8. Fan, Lixian & Luo, Meifeng & Yin, Jinbo, 2014. "Flag choice and Port State Control inspections—Empirical evidence using a simultaneous model," Transport Policy, Elsevier, vol. 35(C), pages 350-357.
    9. Ralf Elbert & Holger Pontow & Alexander Benlian, 2017. "The role of inter-organizational information systems in maritime transport chains," Electronic Markets, Springer;IIM University of St. Gallen, vol. 27(2), pages 157-173, May.

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    More about this item

    Keywords

    Violations; Optimal Penalty; Micro-Panel Data; Oil Spills; Public Policy.;
    All these keywords.

    JEL classification:

    • K - Law and Economics

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