Enforcing fire safety in the catering industry : an economic analysis

Abstract

What is an effective and efficient enforcement policy for fire safety in the catering industry? When and why is an informal, cooperative enforcement style through warnings, persuasion and advice (a so called compliance strategy) effective in inducing compliance with the fire safety regulation? The standard economic model of enforcement stresses the importance of immediately punishing individuals and firms for non-compliance (a deterrence strategy). Part I of this thesis analyzes the economic literature to discuss whether and when a compliance strategy can be beneficial. It discusses which enforcement method (private, administrative or criminal) is effective and efficient to enforce safety standards. Part II of this thesis analyzes the optimal enforcement policy for the case of fire safety in the catering industry in the Netherlands. Enforcement officials have been interviewed to examine the use of a compliance strategy in practice. The benefits and costs of the enforcement efforts of the past years are estimated to see whether these efforts have been a desirable investment. Also, the compensation of the victims of the Volendam disaster is investigated to analyze the incentive to take precautions. Finally, a simulation of different enforcement policies in a representative municipality examines which policy is efficient.