Forcing contracts: Theory, evidence, and policy issues.

摘要

This study investigates the forcing contract as a means of safety regulation. I'm interested in the implications of scheduled inspections, with small penalties, and where the agent is paid from the production process, but the principal owns the property right that allows the agent to operate. The agents in this setting is allowed to operate their firm as long as they are willing to comply with a set of requirements that are designed to minimize the potential harm that the agent can cause during the production process. Evidence on inspection of barges and inspection of hospitals is used to empirically test the effectiveness of forcing contracts.; The theory of regulatory effectiveness is developed from the principal-agent model. The principal and the agent are both only interested in their own payoffs. The optimal contract between the economic players is developed as the non-cooperative Nash solution of maximizing the principal's constrained objective function. The institutional considerations specific to the U.S. Coast Guard (USCG) and Joint Commission on the Accreditation of Healthcare Organizations (JCAHO) are discussed with respect the principal-agent relationship.; The empirical investigation of the effectiveness of regulation is performed using a series of count and duration models. The empirical framework was constructed to incorporate the various sources of heterogeneity in the data. The USCG data was used to investigate the determinants of vessel pollution using inspection data as explanatory variables. The JCAHO data explored the role of regulation on the patient mortality and hospital length of stay.; The findings of the study are that both the USCG and JCAHO can result in marginal improvements to safety outcomes. The effectiveness of the USCG is from the amount of effort that is put into inspections, rather than the deficiencies discovered. The JCAHO patient care standards work to improve patient outcomes, but the administration and management standards have not demonstrated positive results.