Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/260228 
Year of Publication: 
2017
Series/Report no.: 
Working Paper No. 2017:19
Publisher: 
Lund University, School of Economics and Management, Department of Economics, Lund
Abstract: 
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.
Subjects: 
leniency
pass rate
inspection behavior
competition
deregulation
inspection market
JEL: 
D22
L11
L84
Document Type: 
Working Paper

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