Standard setting with incomplete enforcement revisited

Many regulatory agencies enforcing quality standards across diverse populations of firms lack sufficient resources to promote full compliance. Based on a model with lump-sum noncompliance penalties, W. Kip Viscusi and Richard J. Zeckhauser have advocated that, in most circumstances, an agency with insufficient enforcement resources should choose a less stringent standard than it would choose if it could induce full compliance. I show that the recommendation for regulatory restraint depends upon the shape of the penalty function. A review of inspection and penalty policies suggests that U.S. administrative law encompasses a diversity of variable expected penalty policies. The inspection and penalty policies employed in recent environmental statutes suggest, however, that agencies should compensate for insufficient resources by increasing the stringency of standards.     

Rents from in-kind subsidy: “Charity” in the public sector

Public choice analysis usually focuses attention on the behaviour of self-interested individuals but this paper considers rent seeking when some taxpayers are motivated by altruism. Redistribution policies initiated by self-interested rent seekers require taxpayer approval. Even if taxpayers are fully informed, their resistance to inefficient schemes is reduced when public sector schemes are the only means available to pursue altruistic goals. Altruism serves to broaden the scope within which rent seekers may operate. A discussion of international “tied” aid illustrates the impact which rent seeking can exert on public sector “charity.”     

Taxation of Electronic Commerce: A Developing Problem

The rapid growth of e-commerce, especially the sale of goods and services over the internet, has fuelled a debate about the taxation regimes to be used. The shift from a physically oriented commercial environment to a knowledge-based electronic environment poses serious and substantial issues in relation to taxation and taxation regimes. Tax administrations throughout the world face the formidable task of protecting their revenue base without hindering either the development of new technologies or the involvement of the business community in the evolving and growing e-market place. Concerns of governments centre on the impact of e-commerce on the state and local revenue. Whereas states can impose a tax on residents' purchases from out-of-state vendors, they cannot impose an obligation on those vendors to collect the tax unless the vendor has a substantial presence, or nexus, in the state. These problems will be greater for developing countries. The shrinking of the tax base will have a disproportionate effect and further jeopardize the already fragile economy of the developing world.