Optimal Liability Rules: The Case of Renewable Resources Public Deposited

http://ir.library.oregonstate.edu/concern/conference_proceedings_or_journals/zw12z975w

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  • Illegal extraction is a serious issue in many renewable resource industries, such as fisheries and forestry. This traditional approach is to model the resource firm as one cohesive unit or an individual. However, in many cases violations are not committed by an individual, but by agents acting on behalf of an owner or a firm. We ask what the optimal liability scheme is when the illegal extraction activity is carried out by employees representing a firm, rather than by an individual, when the employees can engage in avoidance activities to reduce the risk of detection when extracting illegally (Kornhauser, 1982). We develop a principal-agent model with imperfect information and analyze who should be held liable and punished: the employees, the firm/owner, or perhaps both parties? We find the optimal policy, which involves determining liability rules in conjunction with quotas and punishment levels. The renewable resource case is particularly interesting because it is the firm, and not the agent, that benefits directly from illegal operations. This is in contrast to most of the existing literature on corporate crime and liability, which assumes that only the agent benefits directly from illegal activities. We show how this affects the optimal liability rules.
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  • Hansen, L., Nostbakken, L. & Jensen, F. Optimal Liability Rules: The Case of Renewable Resources: Visible Possibilities: The Economics of Sustainable Fisheries, Aquaculture and Seafood Trade: Proceedings of the Sixteenth Biennial Conference of the International Institute of Fisheries Economics and Trade, July 16-20, Dar es Salaam, Tanzania. Edited by Ann L. Shriver. International Institute of Fisheries Economics and Trade (IIFET), Corvallis, 2012.
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  • description.provenance : Submitted by Martin Eberle Jr (eberlem@onid.orst.edu) on 2013-10-31T21:48:52Z No. of bitstreams: 1 Jensen-148.pdf: 13101 bytes, checksum: 325d2fdc6926869dce532f6367372d83 (MD5)
  • description.provenance : Made available in DSpace on 2013-10-31T22:46:57Z (GMT). No. of bitstreams: 1 Jensen-148.pdf: 13101 bytes, checksum: 325d2fdc6926869dce532f6367372d83 (MD5) Previous issue date: 2012
  • description.provenance : Approved for entry into archive by Janet Webster(janet.webster@oregonstate.edu) on 2013-10-31T22:46:57Z (GMT) No. of bitstreams: 1 Jensen-148.pdf: 13101 bytes, checksum: 325d2fdc6926869dce532f6367372d83 (MD5)

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