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Regulation of Performance Standards versus Equipment Specification with Asymmetric Information

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  • Marino, Anthony M

Abstract

This paper compares the regulation of safety performance standards with the regulation of specific safety equipment. It is well known that if information is perfect, it is more efficient to regulate performance than to regulate specific equipment. The former mechanism fosters cost minimization, while the latter does not. I assume that the firm has more accurate knowledge of its safety production technology than does the regulator and show that under reasonable sufficiency conditions the regulation of equipment specifications is more efficient than the regulation of safety performance standards. I also extend these results to the case of environmental pollution regulation. Copyright 1998 by Kluwer Academic Publishers

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  • Marino, Anthony M, 1998. "Regulation of Performance Standards versus Equipment Specification with Asymmetric Information," Journal of Regulatory Economics, Springer, vol. 14(1), pages 5-18, July.
    • Handle: RePEc:kap:regeco:v:14:y:1998:i:1:p:5-18
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    Cited by:

    1. Stéphan Marette, 2007. "Minimum safety standard, consumers’ information and competition," Journal of Regulatory Economics, Springer, vol. 32(3), pages 259-285, December.
    2. Sungho Yun, 2018. "Minimum safety standards with asymmetric safety costs," Journal of Regulatory Economics, Springer, vol. 53(2), pages 152-173, April.
    3. Lisa Chever & Michael Klien, 2018. "Trading service quality for safety: a cautionary tale from the French ‘Robien law’ on elevator safety," Journal of Regulatory Economics, Springer, vol. 53(1), pages 20-36, February.
    4. Cho, Bo-Hyun & Hooker, Neal H., 2006. "Selection of Food Safety Standards," 2006 Annual meeting, July 23-26, Long Beach, CA 21077, American Agricultural Economics Association (New Name 2008: Agricultural and Applied Economics Association).

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