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Hj Holm

Vice Dean Research Education, Professor

Porträttfoto

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

Author

  • Osmis Habte
  • Hj Holm

Summary, in English

We examine the impact of competition on a firm's incentive to relax the standards of its inspection to its customers in the Swedish motor vehicle inspection market, which is heavily regulated and consciously designed to mitigate incentives to deviate from the regulation. We use a panel dataset representing 22.5 million car roadworthiness tests during the period 2010--2015. Fixed effects and instrumental variable estimations, which are used to account for the endogeneity of competition, show that inspection stations that operate in highly competitive markets are more lenient to their customers than stations that operate in less competitive markets.

Department/s

  • Department of Economics

Publishing year

2017

Language

English

Publication/Series

Working Papers

Issue

2017:19

Document type

Working paper

Publisher

Department of Economics, Lund University

Topic

  • Economics

Keywords

  • leniency
  • pass rate
  • inspection behavior
  • competition
  • deregulation
  • inspection market
  • D22
  • L11
  • L84

Status

Published