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Optimal Marginal Deterrence and Incentives for Precaution

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  • Thomas Lionel

    (CRESE, Université de Franche Comté, IUT Besançon Vesoul, Département GEA, 30 avenue de l’Observatoire, 25030 Besançon cedex, France)

Abstract

This paper studies marginal deterrence in the presence of a basic and an aggravated harm when the occurrence of the latter may be reduced by criminals exerting costly precaution. We determine the optimal probability of fines when the enforcement authority provides incentives such that, if criminals commit offenses, they exert precaution. We show that marginal deterrence is fully optimal, even for severe basic harms. That is, the fine associated with the basic harm is not equal to the maximal sanction, the criminal’s wealth. Moreover, implementing marginal deterrence leads to the use of fines and the probability of being caught and sanctioned in a different way compared to Becker’s well-known result.

Suggested Citation

  • Thomas Lionel, 2015. "Optimal Marginal Deterrence and Incentives for Precaution," Review of Law & Economics, De Gruyter, vol. 11(3), pages 409-433, November.
    • Handle: RePEc:bpj:rlecon:v:11:y:2015:i:3:p:409-433:n:1
    DOI: 10.1515/rle-2012-0009
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    References listed on IDEAS

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    1. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 2, number 2.
    2. Polinsky, A. Mitchell & Shavell, Steven, 2007. "The Theory of Public Enforcement of Law," Handbook of Law and Economics, in: A. Mitchell Polinsky & Steven Shavell (ed.), Handbook of Law and Economics, edition 1, volume 1, chapter 6, pages 403-454, Elsevier.
    3. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54, National Bureau of Economic Research, Inc.
    4. Polinsky, A. Mitchell & Shavell, Steven, 1984. "The optimal use of fines and imprisonment," Journal of Public Economics, Elsevier, vol. 24(1), pages 89-99, June.
    5. Polinsky, A Mitchell & Shavell, Steven, 1992. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," Journal of Law and Economics, University of Chicago Press, vol. 35(1), pages 133-148, April.
    6. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    7. Nuno Garoupa, 1997. "The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-295, September.
    8. A. Mitchell Polinsky & Steven Shavell (ed.), 2007. "Handbook of Law and Economics," Handbook of Law and Economics, Elsevier, edition 1, volume 1, number 1.
    9. Wilde, Louis L., 1992. "Criminal choice, nonmonetary sanctions and marginal deterrence: A normative analysis," International Review of Law and Economics, Elsevier, vol. 12(3), pages 333-344, September.
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