The Public Management of Risk: Separating Ex Ante and Ex Post Monitors

35 Pages Posted: 16 Dec 2010

See all articles by Yolande Hiriart

Yolande Hiriart

Universite de Toulouse I

David Martimort

University of Toulouse 1 - Industrial Economic Institute (IDEI); CESifo (Center for Economic Studies and Ifo Institute)

Jérôme Pouyet

Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS); National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST); Centre for Economic Policy Research (CEPR)

Date Written: December 1, 2010

Abstract

When a firm undertakes risky activities, the conflict between social and private incentives to implement safety care requires public intervention which can take the form of both monetary incentives but also ex ante or ex post monitoring, i.e., before or after an accident occurs. We delineate the optimal scope of monitoring depending on whether public monitors are benevolent or corruptible. We show that separating the ex ante and the ex post monitors increases the likelihood of ex post investigation, helps prevent capture and improves welfare.

Keywords: Risk Regulation, Monitoring, Capture, Integration, Separation

JEL Classification: L51, D82

Suggested Citation

Hiriart, Yolande and Martimort, David and Pouyet, Jerome, The Public Management of Risk: Separating Ex Ante and Ex Post Monitors (December 1, 2010). FEEM Working Paper No. 144.2010. Available at SSRN: https://ssrn.com/abstract=1718467 or http://dx.doi.org/10.2139/ssrn.1718467

Yolande Hiriart (Contact Author)

Universite de Toulouse I ( email )

Place Anatole France
Toulouse Cedex, F-31042
France

David Martimort

University of Toulouse 1 - Industrial Economic Institute (IDEI) ( email )

Manufacture des Tabacs
21 Allee de Brienne bat. F
Toulouse Cedex, F-31000
France
+33 5 6112 8614 (Phone)
+33 5 6112 8637 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Jerome Pouyet

Ecole Nationale des Ponts et Chaussées (ENPC) - Centre d'Enseignement et de Recherche en Analyse Socio-Economique (CERAS) ( email )

28, rue des Saints-Peres
75007 Paris
France
+33 1 4458 2870 (Phone)
+33 1 4458 2880 (Fax)

National Institute of Statistics and Economic Studies (INSEE) - Center for Research in Economics and Statistics (CREST)

15 Boulevard Gabriel Peri
Malakoff Cedex, 1 92245
France

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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