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A critical assessment of voluntary approaches in regulatory programs is presented. When accounting for heterogeneous firms, with varying effectiveness of risk control, the optimality of a lump-sum financial incentive to encourage voluntary adoption is questioned. The paper uses a game-theoretic model to characterize the strategies of a regulator and firms.… (More)
This paper examines performance versus process standards modeling the variability of industry-level compliance and therefore food safety. Monte Carlo simulations are conducted manipulating four factors: the variances of input use of efficient and inefficient firms, the proportion of inefficient firms in the industry and the policymakers' level of risk… (More)