Explaining uniformity in rule design: The role of citizen participation in enforcement

Uniform rules incur high aggregate compliance costs when agents are sufficiently heterogeneous. Despite this, uniformity remains a common feature in regulation. Focusing on the monitoring stage of enforcement, this paper highlights an underappreciated benefit of uniform rules. Uniformity of regulation can enhance the productivity of monitoring. We illustrate the general mechanism by showing that in the presence of members of the public that are willing and able to report violations to the regulator at a cost to themselves, uniform rules allow substituting third-party participation for costly own monitoring. However, socially desirable acts may have to be punished to generate deterrence for undesirable acts. Individualizing monitoring and enforcement and citizens acting on welfare considerations do not improve on the outcome.

► The paper highlights an underappreciated benefit of uniformity in regulation. ► Motivated citizens can participate in the monitoring of agents. ► Subjecting all agents to the same rule makes detection of violations easier for citizens. ► The reduced monitoring costs for the regulator can outweigh the losses from uniformity. ► Individualized enforcement and welfare-oriented citizens do not improve on the outcome.