A Note on Optimal Fines When Wealth Varies Among Individuals
AbstractAn important result in the economic theory of enforcement is that, under certain circumstances, it is optimal for a fine to be as high as possible - to equal the entire wealth of individuals. Such a fine allows the probability of detection to be as low as possible, thereby saving enforcement costs. This note shows that when the level of wealth varies among individuals, the optimal fine generally is less than the wealth of the highest wealth individuals, and may well be less than the wealth of most individuals.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 3232.
Date of creation: Jan 1990
Date of revision:
Publication status: published as The American Economic Review, Vol. 81, No. 3, pp. 618-621, (June 1991).
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
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Other versions of this item:
- Polinsky, A Mitchell & Shavell, Steven, 1991. "A Note on Optimal Fines When Wealth Varies among Individuals," American Economic Review, American Economic Association, vol. 81(3), pages 618-21, June.
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.:
- Kaplow, Louis, 1992.
"The optimal probability and magnitude of fines for acts that definitely are undesirable,"
International Review of Law and Economics,
Elsevier, vol. 12(1), pages 3-11, March.
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in: Essays in the Economics of Crime and Punishment, pages 1-54
National Bureau of Economic Research, Inc.
- A. Mitchell Polinsky & Steven Shavell, 1982.
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NBER Working Papers
0932, National Bureau of Economic Research, Inc.
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