Is a Minimum Regulation Efficient: Empirical Evidence from Roadworthiness Inspection Regime in EU-27

Abstract

Is a minimum regulation efficient or not? This general question of the paper is answered by empirical evidence using cost-benefit analyses. The period technical inspection in the European Union is regulated by a minimum regulation leading to 13 different practices of roadworthiness inspection of passenger cars and light goods vehicles. It can be shown that for Belgium, which has a best-case inspection, moving to the minimum regulation will lead to annual welfare losses of $93.6 million, and for Germany a marginal improvement of the minimum regulation leads to $1 billion benefits per year and an average benefit cost-ratio of 1.7.