Abstract
This paper re-examines Yoshida’s analysis (1993 and 1996) and draws further aspects of economic welfare within Bond and Chen's framework (1987). We show that an increase in fine that a firm pays could be a better policy than an intensification of internal inspection enforcement from a welfare point of view. We also show that, in the case where capital is internationally mobile, if technologies are different between countries and labor-capital intensity is larger in the home country than in the foreign, the impact of an increase in enforcement on the factor prices is opposite to that of Bond and Chen (1987). We also enlarge the welfare effect of an increase in enforcement more precisely in the case of capital movement.
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