Template-Type: ReDIF-Paper 1.0
Title: Regulatory Capacity in a Game of Asymmetric Regulation
Author-Name: Jacopo Gambato
Author-Email: ja.gambato@gmail.com
Author-Name: Bernhard Ganglmair
Author-Email: b.ganglmair@gmail.com
Author-Name: Julia Krämer
Author-Email: j.k.kramer@law.eur.nl

Classification-JEL: H32, K20, L51
Keywords: agency resources, asymmetric enforcement, compliance, multi-tasking, regulation

Abstract: In a model of asymmetric regulation, a firm can comply with two regulatory targets,
and a regulator can audit the firm for compliance. Inspection by the regulator is
imperfect, and it assesses the firm’s compliance with the targets with different success
probabilities. The firm fully complies only if compliance costs are low. Otherwise, the
firm always prioritizes the requirement that is easier to enforce. Expanding regulatory
capacity positively affects compliance with the easy-to-enforce target; however, a higher
capacity can harm compliance with the hard-to-enforce target.
Note: 
Length: 12
Creation-Date: 2025-10
Revision-Date:
File-URL: https://www.crctr224.de/research/discussion-papers/archive/dp706
File-Format: application/pdf
Handle: RePEc:bon:boncrc:CRCTR224_2025_706