Too Small to Regulate

Basu, Kaushik ; Dixit, Avinash

World Bank, Washington, DC

关键词: BANKS;    BRANCHES;    COMPETITIVE INDUSTRIES;    COMPLIANCE WITH REGULATIONS;    CONGLOMERATE;   

DOI  :  10.1596/1813-9450-6860
RP-ID  :  WPS6860

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

The paper argues that to achievecompliance of firms with regulations such as product qualityor environmental or health standards it is better to haveindustries with a few large corporations than numerous smallfirms. A model is constructed to show that limited liabilityconstraints bind more easily in competitive industries,making it harder to impose sufficiently severe penalties andcostlier to send sufficient monitors. Having largecorporations allows the government effectively to delegatesome of its monitoring functions to the managers of thecorporation. The tradeoff between this issue and the usualargument in favor of competition is considered.