Welfare Enhancing Regulation Exemptions

29 Pages Posted: 8 Apr 2011 Last revised: 24 Jul 2012

See all articles by Murat C. Mungan

Murat C. Mungan

Texas A&M University School of Law

Date Written: November 1, 2010

Abstract

Sanctions for regulation violations are used to deter conduct which could potentially result in great social harms. This practice over-deters low-risk entities and under-deters high-risk entities, which leads to social losses. This paper analyzes whether and how such social losses can be mitigated. I show that this can be achieved by allowing regulatees to purchase passes exempting them from regulations at appropriate prices, although they remain liable for any harm they cause.

Keywords: Regulation, Optimal Deterrence, Exemptions

JEL Classification: K0, K2, K23, K32, K4

Suggested Citation

Mungan, Murat C., Welfare Enhancing Regulation Exemptions (November 1, 2010). International Review of Law and Economics, Vol. 31, No. 4, 2011, FSU College of Law, Public Law Research Paper No. 504, FSU College of Law, Law, Business & Economics Paper No. 11-7, Available at SSRN: https://ssrn.com/abstract=1803245

Murat C. Mungan (Contact Author)

Texas A&M University School of Law

1515 Commerce St.
Fort Worth, TX Tarrant County 76102
United States

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