Arbeitspapier

Competition Makes Inspectors More Lenient: Evidence from the Motor Vehicle Inspection Market

We examine the impact of competition on firms' leniency towards their customers in a heavily regulated market, which is consciously designed to mitigate incentives to deviate from the regulation. Using a panel data set representing 22.5 million periodic vehicle roadworthiness tests during the period 2010-2015, we show that inspection stations operating in more competitive markets are more lenient to their customers than stations operating in less competitive markets. We present both fixed effects and instrumental variable estimates of the effect of competition on firms' incentive to be lenient to their customers.

Language
Englisch

Bibliographic citation
Series: Working Paper ; No. 2017:19

Classification
Wirtschaft
Firm Behavior: Empirical Analysis
Production, Pricing, and Market Structure; Size Distribution of Firms
Personal, Professional, and Business Services
Subject
leniency
pass rate
inspection behavior
competition
deregulation
inspection market

Event
Geistige Schöpfung
(who)
Habte, Osmis
Holm, Håkan J.
Event
Veröffentlichung
(who)
Lund University, School of Economics and Management, Department of Economics
(where)
Lund
(when)
2017

Handle
Last update
10.03.2025, 11:43 AM CET

Data provider

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Object type

  • Arbeitspapier

Associated

  • Habte, Osmis
  • Holm, Håkan J.
  • Lund University, School of Economics and Management, Department of Economics

Time of origin

  • 2017

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