This work researches about Self Regulatory Organizations’ incentives to exert
regulation of quality. The analysis is based upon an agency approach, which
involves the existence of a principal, who has the responsibility of monitoring
the standard of quality of goods that are provided by the SRO’s members (agents),
and to report to whom doesn’t meet that. The motivation for the enforcement is
reputational, given that consumers cannot observe the goods’ quality, but rely
on the observation of reporting of fraud signals by the SRO to infer it. Therefore,
quality emerges endogenously by the strategic interaction between the principal’s
incentives to watch and the agent’s tendency towards fraud. This work analyzes
how the possibility of corruption impacts upon the SRO’s incentives for the enforcement
of standards. Corruption arises when agents discovered in fraudulent activities, pay a bribe and avoid to be punished. The main result is that the more
likely equilibrium implies a level of fraud greater than in a world without possibility
of corruption. Besides, there is fraud cover up and impunity.
Keywords:
Organismos Autorregulados, credence goods, juegos dinámicos con información incompleta, agente-principal
Nuñez, J., Díaz, G., & Vargas, M. (2016). Autorregulación con la posibilidad de corrupción. Estudios De Economía, 30(2), pp. 179–198. Retrieved from https://estudiosdeeconomia.uchile.cl/index.php/EDE/article/view/40849
