Review of Nuclear Regulation using Principal-Agent Model

Regulation is performed by the government on behalf of the public to accomplish a societal goal. However, the public is not necessarily confident that regulatory authority does well enough for the benefit of the public. That is partly because they have less information, competence and resources for monitoring regulatory activities. However, it is a problem that cannot be solved easily only by efforts of the personnel involved. In nuclear industry and regulation, there is increasing concerns of the local community on the decision making related to the safety matters on nuclear facilities. Resident people on NPP sites realize that radiation risk caused by the NPPs is their first concern, whereas the general public as a whole is less concerned with the radiation risk or nuclear safety. Regulatory organizations have less motivation to do their best because they pursue their private or group interests. In this paper, the above mentioned issue has been reviewed in terms of principal agent problem(PAP) theory and also the PAP model for Korean nuclear regulatory system has been developed