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Optimal failure rates and penalty-bonus policies in the offshore petroleum sector

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  • Eirik Amundsen

Abstract

We characterize optimal time profiles of risk-reducing expenditures and wreck probabilities for petroleum platforms. The input to our analysis is the development of wreck cost, direct and imputed. Particular attention is paid to the question of how private companies deviating from socially optimal standards may be induced to comply with such standards by means of a) a time-variant penalty, b) a no-wreck bonus and c) a time-invariant penalty. Copyright Kluwer Academic Publishers 1992

Suggested Citation

  • Eirik Amundsen, 1992. "Optimal failure rates and penalty-bonus policies in the offshore petroleum sector," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 2(5), pages 469-489, September.
    • Handle: RePEc:kap:enreec:v:2:y:1992:i:5:p:469-489
    DOI: 10.1007/BF00376830
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    References listed on IDEAS

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    1. Arthur, W B, 1981. "The Economics of Risks to Life," American Economic Review, American Economic Association, vol. 71(1), pages 54-64, March.
    2. Steven Shavell, 2003. "Economic Analysis of Accident Law," NBER Working Papers 9694, National Bureau of Economic Research, Inc.
    3. Reed, William J., 1984. "The effects of the risk of fire on the optimal rotation of a forest," Journal of Environmental Economics and Management, Elsevier, vol. 11(2), pages 180-190, June.
    4. Segerson, Kathleen, 1989. "Risk and incentives in the financing of hazardous waste cleanup," Journal of Environmental Economics and Management, Elsevier, vol. 16(1), pages 1-8, January.
    5. Steven Shavell, 1983. "Liability for Harm Versus Regulation of Safety," NBER Working Papers 1218, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Jon Strand, 1994. "Environmental accidents under moral hazard and limited firm liability," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(5), pages 495-509, October.

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