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Setting Standards for Credible Compliance and Law Enforcement

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Author Info
Marcel Boyer ()
Tracy Lewis ()
Wei Lin Liu

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Abstract

This paper examines the setting of optimal legal standards to simultaneously induce parties to invest in care and to motivate law enforcers to detect violators of the law. The strategic interaction between care providers and law enforcers determines the degree of efficiency achieved by the standards. Our principal finding is that some divergence between the marginal benefits and marginal costs of providing care is required to control enforcement costs. Further, the setting of standards may effectively substitute for the setting of fines when penalties for violation are fixed. In particular, maximal fines may be welfare reducing when standards are set optimally.

Nous considérons dans cet article la détermination, en information incomplète, de normes légales optimales pour à la fois inciter les citoyens à faire preuve de diligence (prévention) et motiver les agents de la paix à veiller au respect des lois. L'interaction stratégique entre citoyens et agents de la paix détermine l'efficacité des normes choisies. Notre résultat principal est à l'effet qu'un écart entre bénéfices marginaux et coûts marginaux de la diligence est nécessaire afin de réduire les coûts d'application des lois. De plus, les normes peuvent être un substitut aux amendes lorsque les pénalités pour infraction sont fixes. Des amendes maximales peuvent en particulier être contre-indiquées lorsque les normes sont optimalement déterminées.

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Paper provided by CIRANO in its series CIRANO Working Papers with number 96s-27.

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Date of creation: 01 Oct 1996
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Handle: RePEc:cir:cirwor:96s-27

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Related research
Keywords: Law Enforcement; Legal Standards; Fines; Strategic Behavior; Normes légales; amendes; respect des lois; comportement stratégique;

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Find related papers by JEL classification:
D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information
K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Kaplow, Louis & Shavell, Steven, 1994. "Optimal Law Enforcement with Self-Reporting of Behavior," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 583-606, June. [Downloadable!] (restricted)
    Other versions:
  2. Guesnerie, Roger & Laffont, Jean-Jacques, 1984. "A complete solution to a class of principal-agent problems with an application to the control of a self-managed firm," Journal of Public Economics, Elsevier, vol. 25(3), pages 329-369, December. [Downloadable!] (restricted)
  3. Graetz, Michael J & Reinganum, Jennifer F & Wilde, Louis L, 1986. "The Tax Compliance Game: Toward an Interactive Theory of Law Enforcement," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(1), pages 1-32, Spring.
    Other versions:
  4. Mookherjee, Dilip & Png, I P L, 1992. "Monitoring vis-a-vis Investigation in Enforcement of Law," American Economic Review, American Economic Association, vol. 82(3), pages 556-65, June. [Downloadable!] (restricted)
  5. Tirole, Jean, 1986. "Hierarchies and Bureaucracies: On the Role of Collusion in Organizations," Journal of Law, Economics and Organization, Oxford University Press, vol. 2(2), pages 181-214, Fall.
  6. Border, Kim C. & Sobel, Joel., 1985. "A Theory of Auditing and Plunder," Working Papers 573, California Institute of Technology, Division of the Humanities and Social Sciences. [Downloadable!]
  7. William M. Landes & Richard A. Posner, 1974. "The Private Enforcement of Law," NBER Working Papers 0062, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  8. Tirole, Jean, 1991. "Collusion and the Theory of Organizations," IDEI Working Papers 9, Institut d'Économie Industrielle (IDEI), Toulouse.
  9. Harrington, Winston, 1988. "Enforcement leverage when penalties are restricted," Journal of Public Economics, Elsevier, vol. 37(1), pages 29-53, October. [Downloadable!] (restricted)
  10. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June. [Downloadable!] (restricted)
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  11. Polinsky, Mitchell & Shavell, Steven, 1979. "The Optimal Tradeoff between the Probability and Magnitude of Fines," American Economic Review, American Economic Association, vol. 69(5), pages 880-91, December. [Downloadable!] (restricted)
  12. Mookherjee, Dilip & Png, I P L, 1994. "Marginal Deterrence in Enforcement of Law," Journal of Political Economy, University of Chicago Press, vol. 102(5), pages 1039-66, October. [Downloadable!] (restricted)
  13. Laffont, Jean-Jacques & Tirole, Jean, 1991. "The Politics of Government Decision-Making: A Theory of Regulatory Capture," The Quarterly Journal of Economics, MIT Press, vol. 106(4), pages 1089-127, November. [Downloadable!] (restricted)
    Other versions:
  14. repec:att:wimass:19898 is not listed on IDEAS
  15. Arun S. Malik, 1990. "Avoidance, Screening and Optimum Enforcement," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 341-353, Autumn. [Downloadable!] (restricted)
  16. David P. Baron & David Besanko, 1984. "Regulation, Asymmetric Information, and Auditing," RAND Journal of Economics, The RAND Corporation, vol. 15(4), pages 447-470, Winter. [Downloadable!] (restricted)
  17. Laffont, Jean-Jacques & Tirole, Jean, 1990. "The Politics of Government Decision Making: Regulatory Institutions," Journal of Law, Economics and Organization, Oxford University Press, vol. 6(1), pages 1-31, Spring.
  18. Becker, Gary S, 1983. "A Theory of Competition among Pressure Groups for Political Influence," The Quarterly Journal of Economics, MIT Press, vol. 98(3), pages 371-400, August. [Downloadable!] (restricted)
Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Marcel Boyer & Donatella Porrini, 2002. "Modeling the Choice Between Regulation and Liability in Terms of Social Welfare," CIRANO Working Papers 2002s-13, CIRANO. [Downloadable!]
    Other versions:
  2. Marcel Boyer, 1997. "L'économie des organisations : Mythes et réalités," CIRANO Working Papers 97s-02, CIRANO. [Downloadable!]
  3. Alfredo Burlando & Alberto Motta, 2007. "Self Reporting reduces corruption in law enforcement," "Marco Fanno" Working Papers 0063, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
    Other versions:
  4. Marcel Boyer & Donatella Porrini, 2007. "Sharing Liability Between Banks and Firms: The Case of Industrial Safety Risk," CIRANO Working Papers 2007s-04, CIRANO. [Downloadable!]
  5. Marcel Boyer & Donatella Porrini, 2000. "Law versus Regulation: A Political Economy Model of Instrument Choice in Environmental Policy," CIRANO Working Papers 2000s-57, CIRANO. [Downloadable!]
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