An empirical examination of moral hazard in the vehicle inspection market

Thomas N. Hubbard*

*Corresponding author for this work

Research output: Chapter in Book/Report/Conference proceedingChapter

Abstract

Moral hazard arises in “diagnosis-cure” markets such as auto repair and health care when sellers have an incentive to misrepresent a buyer’s condition in order to increase demand for the treatments they supply. This article examines the market for California vehicle emission inspections. Using transaction-level data, I investigate whether the market provides incentives that lead inspectors to help vehicles pass and how the behavior of inspectors varies with their firm’s organizational characteristics. I find that consumers are generally able to provide firms and inspectors incentives to help them pass, and I find cross-firm differences that are consistent with agency theory.

Original languageEnglish (US)
Title of host publicationControlling Automobile Air Pollution
PublisherTaylor and Francis
Pages145-165
Number of pages21
ISBN (Electronic)9781351161077
ISBN (Print)9780815388227
DOIs
StatePublished - Jan 1 2018

ASJC Scopus subject areas

  • Economics, Econometrics and Finance(all)
  • Business, Management and Accounting(all)
  • Environmental Science(all)

Fingerprint Dive into the research topics of 'An empirical examination of moral hazard in the vehicle inspection market'. Together they form a unique fingerprint.

  • Cite this

    Hubbard, T. N. (2018). An empirical examination of moral hazard in the vehicle inspection market. In Controlling Automobile Air Pollution (pp. 145-165). Taylor and Francis. https://doi.org/10.4324/9781351161084-9