The Optimal Use of Fines and Imprisonment If Governments Do Not Maximize Welfare
AbstractWe consider a stylized model of crime and punishment in which the prosecution policy is defined by three variables: the size of punishment, the type of punishment, and the detection probability. We derive the optimal type of punishment under the assumption that the detection probability is chosen by a government whose objective function places a higher weight on the government's budget than the social welfare function does. We show that for serious crimes exclusive imprisonment is welfare maximizing. If costs of imprisonment are taken into account, the optimal punishment is a prison term with an additional fine that is smaller or equal to the costs of the prison term. For less serious crimes, fines without imprisonment are welfare maximizing. Therefore, this paper demonstrates that the standard result of the literature that fines should be used whenever feasible need not hold in the presence of a rent-seeking government. Moreover, it offers a new explanation for the widespread use of mandatory imprisonment for serious crimes. Copyright 2006 Blackwell Publishing, Inc..
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Association for Public Economic Theory in its journal Journal of Public Economic Theory.
Volume (Year): 8 (2006)
Issue (Month): 4 (October)
Contact details of provider:
Web page: http://www.blackwellpublishing.com/journal.asp?ref=1097-3923
More information through EDIRC
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Eric Langlais & Marie Obidzinski, 2013.
"Elected vs appointed public law enforcers,"
- Neumärker, Bernhard & Pech, Gerald, 2010.
"Penalties in the theory of equilibrium tax evasion: Solving King John's problem,"
The Constitutional Economics Network Working Papers
01-2010, University of Freiburg, Department of Economic Policy and Constitutional Economic Theory.
- Bernhard Neumärker & Gerald Pech, 2011. "Penalties in the Theory of Equilibrium Tax Evasion: Solving King John's Problem," Public Finance Review, , vol. 39(1), pages 5-24, January.
- Wielhouwer, Jacco L., 2013. "When is public enforcement of insider trading regulations effective?," International Review of Law and Economics, Elsevier, vol. 34(C), pages 52-60.
- Celik, Gorkem & Sayan, Serdar, 2005. "To Give In or Not To Give In To Bribery? Setting the Optimal Fines for Violations of Rules when the Enforcers are Likely to Ask for Bribes," Microeconomics.ca working papers celik-05-08-03-12-50-26, Vancouver School of Economics, revised 06 Aug 2008.
- Gorkem Celik & Serdar Sayan, 2008. "On the optimality of nonmaximal fines in the presence of corruptible law enforcers," Review of Economic Design, Springer, vol. 12(3), pages 209-227, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Wiley-Blackwell Digital Licensing) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.