Designing Biosecurity Inspection Regimes to Account for Stakeholder Incentives: An Inspection Game Approach

Abstract

We investigate the potential for biosecurity regulators to design inspection regimes that reduce intervention and encourage importers to decrease the likelihood of biosecurity risk material being present in consignments. The interaction between a biosecurity regulator and a vertically integrated importer is framed as an inspection game. Our principal focus is a dynamic version of the game, which we use to assess whether regimes based on past compliance can encourage behaviours consistent with the regulatory objective. Our results suggest appropriate candidates for compliance-based inspection regimes are goods where there is access to cost-effective 'fixed' abatement technologies, and those with high costs associated with being inspected or failing inspection.