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The Scope of Punishment: An Economic Theory of Harm-Based vs. Act-Based Sanctions

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  • Garoupa, Nuno
  • Obidzinski, Marie

Abstract

The harm caused by many acts is not certain but probabilistic. Current public enforcement of the law combines harm-based sanctions (usually in criminal law) with act-based sanctions (very common in administrative law and regulation). We propose an economic theory of the choice between harm-based and act-based sanctions in public enforcement. The efficiency of act-based versus harm-based sanctions is analyzed and a typology of the determinants is drawn up. In the simple model with risk neutral offenders, both legal policies have the same deterrent level, but act-based sanctions end up punishing more people and the sanctions are lower. However when the assessment of the probability of harm diverges across individuals, the choice between harm-based or act-based sanctions depends on whether it is the enforcer or the average individual who is better informed. Legal policy implications are discussed.

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Paper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 5899.

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Date of creation: Oct 2006
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Handle: RePEc:cpr:ceprdp:5899

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Keywords: act-based sanction; harm-based sanction; uncertain harm;

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  1. 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.
  2. Schmitz, Patrick W., 2000. "On the Joint Use of Liability and Safety Regulation," MPRA Paper 12536, University Library of Munich, Germany.
  3. Friedman, David D, 1991. "Impossibility, Subjective Probability, and Punishment for Attempts," The Journal of Legal Studies, University of Chicago Press, vol. 20(1), pages 179-86, January.
  4. 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.
  5. 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.
  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. Dhammika Dharmapala & Nuno Garoupa, 2004. "Penalty Enhancement for Hate Crimes: An Economic Analysis," American Law and Economics Review, Oxford University Press, vol. 6(1), pages 185-207.
  8. Shavell, Steven, 1990. "Deterrence and the Punishment of Attempts," The Journal of Legal Studies, University of Chicago Press, vol. 19(2), pages 435-66, June.
  9. Louis Kaplow, 1995. "A Model of the Optimal Complexity of Rules," NBER Working Papers 3958, National Bureau of Economic Research, Inc.
  10. Isaac Ehrlich & Richard A. Posner, 1974. "An Economic Analysis of Legal Rulemaking," The Journal of Legal Studies, University of Chicago Press, vol. 3(1), pages 257-286, January.
  11. Fon, Vincy & Parisi, Francesco, 2007. "On the optimal specificity of legal rules," Journal of Institutional Economics, Cambridge University Press, vol. 3(02), pages 147-164, August.
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