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

George Mason University - Antonin Scalia Law School, Faculty

Date Written: November 1, 2010


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)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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