Optimal failure rates and penalty-bonus policies in the offshore petroleum sector |
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Authors: | Eirik S Amundsen |
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Institution: | (1) Department of Economics, The University of Bergen, Jonas Reinsgt. 19, N-5008 Bergen-U, Norway |
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Abstract: | We characterize optimal time profiles of risk-reducing expenditures and wreck probabilities for petroleum platforms. The input to our analysis is the development of wreck cost, direct and imputed. Particular attention is paid to the question of how private companies deviating from socially optimal standards may be induced to comply with such standards by means of a) a time-variant penalty, b) a no-wreck bonus and c) a time-invariant penalty. |
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Keywords: | Petroleum-production failure rates penalty-bonus policies |
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