How much discretion for risk regulators? - Archive ouverte HAL Access content directly
Journal Articles RAND Journal of Economics Year : 2012

How much discretion for risk regulators?

(1) , (2, 3)
1
2
3

Abstract

We analyze the regulation of firms that undertake socially risky activities but can reduce the probability of an accident inflicted on third parties by carrying out non verifiable effort. Congress delegates regulation to an agency, although these two bodies may have different preferences toward the industry. The optimal level of discretion left to the agency results from the following trade-off: the agency can tailor discretionary policies to its expert knowledge about potential harm, but it implements policies that are too "pro-industry." The agency should be given full discretion when the firm is solvent; partial discretion is preferred otherwise. We then investigate how this trade-off changes as the political and economic landscapes are modified.

Dates and versions

hal-00813175 , version 1 (15-04-2013)

Identifiers

Cite

Yolande Hiriart, David Martimort. How much discretion for risk regulators?. RAND Journal of Economics, 2012, 43 (2), pp.283-314. ⟨10.1111/j.1756-2171.2012.00166.x⟩. ⟨hal-00813175⟩
161 View
0 Download

Altmetric

Share

Gmail Facebook Twitter LinkedIn More