The Effect of Inspector Group Size and Familiarity on Enforcement and Deterrence: Evidence from Oil Platforms

42 Pages Posted: 7 Nov 2013 Last revised: 23 Jun 2014

See all articles by Lucija Muehlenbachs

Lucija Muehlenbachs

Resources for the Future; University of Calgary

Stefan Staubli

University of Zurich; RAND Corporation - Labor and Population; Netspar

Mark A. Cohen

Vanderbilt University - Strategy and Business Economics; Vanderbilt University - Law School; Resources for the Future

Date Written: November 6, 2013

Abstract

This paper provides new insights into the productivity of teams and the relationship between the inspector and the inspected party by examining data on inspections of offshore oil and gas platforms in the Gulf of Mexico. We exploit weather patterns that only influence the number of inspectors that are sent to inspect a platform and show that inspector group size matters; an additional inspector results in more severe sanctions being issued. We also exploit the agglomeration of two inspection offices to examine the effect of reducing the familiarity between an inspector and an inspected party; we find that reducing the inspector-offender relationship also results in more severe sanctions being issued. Combined, these findings are consistent with regulatory capture and related concerns about insulating inspectors from undue influence by those they are supposed to monitor. Using these shifts in sanction severity we also estimate the effectiveness of increasing enforcement on the deterrence of incidents, such as oil spills, fires, injuries, or fatalities. We only find weak evidence that increasing sanction severity increases deterrence.

Keywords: inspections, enforcement, offshore oil, environment

JEL Classification: Q58, K42

Suggested Citation

Muehlenbachs, Lucija and Staubli, Stefan and Cohen, Mark A., The Effect of Inspector Group Size and Familiarity on Enforcement and Deterrence: Evidence from Oil Platforms (November 6, 2013). Vanderbilt Law and Economics Research Paper No. 13-35; Vanderbilt Owen Graduate School of Management Research Paper No. 2350923. Available at SSRN: https://ssrn.com/abstract=2350923 or http://dx.doi.org/10.2139/ssrn.2350923

Lucija Muehlenbachs

Resources for the Future ( email )

Washington, DC 20036
United States

University of Calgary ( email )

University Drive
Calgary, Alberta T2N 1N4
Canada

Stefan Staubli

University of Zurich ( email )

Rämistrasse 71
Zürich, CH-8006
Switzerland

RAND Corporation - Labor and Population ( email )

United States

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Mark A. Cohen (Contact Author)

Vanderbilt University - Strategy and Business Economics ( email )

Nashville, TN 37203
United States
615-322-0533 (Phone)

HOME PAGE: http://https://business.vanderbilt.edu/bio/mark-cohen/

Vanderbilt University - Law School

131 21st Avenue South
Nashville, TN 37203-1181
United States

Resources for the Future ( email )

1616 P Street, NW
Washington, DC 20036
United States
202-328-5000 (Phone)

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