Hj Holm
Vice Dean Research Education, Professor
Competition Makes Inspectors More Lenient: Evidence from the Motor Vehicle Inspection Market
Author
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
Full text
Links
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