Jérôme Pouyet (Ecole d'Economie de Paris)

When a firm undertakes risky activities, the conflict between social and private incentives to exercise safety care requires public intervention. This control takes the form of both monetary incentives but also monitoring taking place either ex ante or ex post, i. e. before or after an accident occurs. We delineate the relative scopes of these activities when public monitors are either benevolent or corruptible. Sepration between ex ante and ex post monitors helps to prevent capture, improves welfare, and increases the likehood of ex post investigation. The talk is based on joint work with Yolande Hiriart and David Martimort.