The role of warnings in regulation: keeping control with less punishment

• 成果类型: Article
• 署名作者: Nyborg, K; Telle, K
• 署名单位: Statistics Norway
• 刊物名称: JOURNAL OF PUBLIC ECONOMICS
• ISSN/ISSBN: 0047-2727
• DOI: 10.1016/j.jpubeco.2004.02.004
• 发表日期: 2004
• 页码: 2801-2816
• 关键词: enforcement; warnings; multiple equilibria

摘要

Regulatory agencies frequently present violators with warnings, not pursuing prosecution if the violation ceases upon receipt of the warning. We show how such warnings may help regulators to keep control: Prosecution is costly for the regulator, and insufficient prosecution efforts yield low penalties. Thus, with a limited regulatory budget, threats of harsh sanctions are credible only if the number of violators is low. This produces multiple Nash equilibria. If firms may make mistakes, the economy can accidentally switch from one equilibrium to another. Warnings reduce substantially the probability of such accidental switches from the full-compliance to the no-compliance equilibrium. (C) 2004 Elsevier B.V. All rights reserved.