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

34 Pages Posted: 15 Apr 2005

See all articles by Jérôme Pouyet

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)

Yolande Hiriart

Universite de Toulouse I

David Martimort

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 2005

Abstract

When firms undertake activities which are environmentally risky, the divergence between social and private incentives to exert safety care requires public intervention. This control occurs both through ex ante regulation and ex post legal investigation. We delineate the respective scopes of those two kinds of monitoring when regulators and judges may not be benevolent. Separation between the ex ante and the ex post monitors of the firm helps to prevent capture. The likelihood of both ex ante and ex post inspections is higher under separation than under integration. This provides a rationale for the wide-spread institutional trend that has led to the separation of ex ante regulation from ex post prosecution. The robustness of this result is investigated in various extensions. Only when collusion is self-enforcing might it be possible that integration dominates separation.

Keywords: Environmental risk, regulation, liability, ex ante and ex post investigations, integration and separation

JEL Classification: L51

Suggested Citation

Pouyet, Jerome and Hiriart, Yolande and Martimort, David, The Public Management of Environmental Risk: Separating Ex Ante and Ex Post Monitors (March 2005). Available at SSRN: https://ssrn.com/abstract=688453 or http://dx.doi.org/10.2139/ssrn.688453

Jerome Pouyet (Contact Author)

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

Yolande Hiriart

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

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