Inspection Intensity and Market Structure, October 2005

(2005) Inspection Intensity and Market Structure, October 2005. Iowa State University

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Abstract

An investigation of financing an inspection policy while allowing the enforcement of a market regulation is described. A simple model shows that the intensity of controls depends on the market structure. Under a given number of firms, the per-firm probability of controls is lower than one, since firms’ incentive to comply with regulation holds under positive profits. In this case, a lump-sum tax is used for limiting distortions coming from financing with a fixed fee. Under free entry, the per-firm probability of controls is equal to one, and only a fixed fee that prevents excess entry is used to finance inspection.

Item Type: Departmental Report
Keywords: inspection policies, market regulation, regulatory funding
Subjects: Business and industry > Economic forecasts
Business and industry > Economic development
Agriculture and food production > Agricultual statistics
ID Code: 3045
Deposited By: Margaret Barr
Deposited On: 17 Nov 2005
Last Modified: 17 Nov 2005
URI: http://publications.iowa.gov/id/eprint/3045

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