Too Small to Regulate

The paper argues that to achieve compliance of firms with regulations such as product quality or environmental or health standards it is better to have industries with a few large corporations than numerous small firms. A model is constructed to sh...

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Main Authors:	Basu, Kaushik, Dixit, Avinash
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	BANKS BRANCHES COMPETITIVE INDUSTRIES COMPLIANCE WITH REGULATIONS CONGLOMERATE CORPORATION CORPORATIONS CRIME ENVIRONMENTAL DAMAGE FIRMS GOVERNMENT REGULATION LAWS LIABILITY MONOPOLY PENALTIES PENALTY REGULATORY POLICIES REGULATORY VIOLATIONS SAFETY SAFETY REGULATION SAFETY STANDARDS SHOPS SMALL FIRM SMALL FIRMS
Online Access:	http://documents.worldbank.org/curated/en/2014/05/19457865/too-small-regulate http://hdl.handle.net/10986/18342

id	okr-10986-18342
recordtype	oai_dc
spelling	okr-10986-183422021-06-14T10:29:38Z Too Small to Regulate Basu, Kaushik Dixit, Avinash BANKS BRANCHES COMPETITIVE INDUSTRIES COMPLIANCE WITH REGULATIONS CONGLOMERATE CORPORATION CORPORATIONS CRIME ENVIRONMENTAL DAMAGE FIRMS GOVERNMENT REGULATION LAWS LIABILITY MONOPOLY PENALTIES PENALTY REGULATORY POLICIES REGULATORY VIOLATIONS SAFETY SAFETY REGULATION SAFETY STANDARDS SHOPS SMALL FIRM SMALL FIRMS The paper argues that to achieve compliance of firms with regulations such as product quality or environmental or health standards it is better to have industries with a few large corporations than numerous small firms. A model is constructed to show that limited liability constraints bind more easily in competitive industries, making it harder to impose sufficiently severe penalties and costlier to send sufficient monitors. Having large corporations allows the government effectively to delegate some of its monitoring functions to the managers of the corporation. The tradeoff between this issue and the usual argument in favor of competition is considered. 2014-05-15T15:58:38Z 2014-05-15T15:58:38Z 2014-05 http://documents.worldbank.org/curated/en/2014/05/19457865/too-small-regulate http://hdl.handle.net/10986/18342 English en_US Policy Research Working Paper;No. 6860 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	BANKS BRANCHES COMPETITIVE INDUSTRIES COMPLIANCE WITH REGULATIONS CONGLOMERATE CORPORATION CORPORATIONS CRIME ENVIRONMENTAL DAMAGE FIRMS GOVERNMENT REGULATION LAWS LIABILITY MONOPOLY PENALTIES PENALTY REGULATORY POLICIES REGULATORY VIOLATIONS SAFETY SAFETY REGULATION SAFETY STANDARDS SHOPS SMALL FIRM SMALL FIRMS
spellingShingle	BANKS BRANCHES COMPETITIVE INDUSTRIES COMPLIANCE WITH REGULATIONS CONGLOMERATE CORPORATION CORPORATIONS CRIME ENVIRONMENTAL DAMAGE FIRMS GOVERNMENT REGULATION LAWS LIABILITY MONOPOLY PENALTIES PENALTY REGULATORY POLICIES REGULATORY VIOLATIONS SAFETY SAFETY REGULATION SAFETY STANDARDS SHOPS SMALL FIRM SMALL FIRMS Basu, Kaushik Dixit, Avinash Too Small to Regulate
relation	Policy Research Working Paper;No. 6860
description	The paper argues that to achieve compliance of firms with regulations such as product quality or environmental or health standards it is better to have industries with a few large corporations than numerous small firms. A model is constructed to show that limited liability constraints bind more easily in competitive industries, making it harder to impose sufficiently severe penalties and costlier to send sufficient monitors. Having large corporations allows the government effectively to delegate some of its monitoring functions to the managers of the corporation. The tradeoff between this issue and the usual argument in favor of competition is considered.
format	Publications & Research :: Policy Research Working Paper
author	Basu, Kaushik Dixit, Avinash
author_facet	Basu, Kaushik Dixit, Avinash
author_sort	Basu, Kaushik
title	Too Small to Regulate
title_short	Too Small to Regulate
title_full	Too Small to Regulate
title_fullStr	Too Small to Regulate
title_full_unstemmed	Too Small to Regulate
title_sort	too small to regulate
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2014/05/19457865/too-small-regulate http://hdl.handle.net/10986/18342
_version_	1764440668818636800

Too Small to Regulate

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