Too much or not enough crimes? On the ambiguous effects of repression
AbstractThe purpose of this paper is to investigate the optimal enforcement of the penal code when criminals invest in a specific class of avoidance activities termed dissembling activities (i.e. self-protection efforts undertaken by criminals to hedge their illegal gains in case of detection and arrestation). We show that the penal law has two screening effects: it separates the population of potential criminals between those who commit the crime and those who do not, and in the former group, between those who undertake dissembling efforts and those who do not. Then, we show that it is never optimal to use less than the maximal fine in contrast to what may occur with avoidance detection (i.e. efforts undertaken in order to reduce the probability of arrestation: Malik (1990)); and furthermore, that the optimal penal code may imply overdeterrence. Finally, we show that any reform of the penal code has ambiguous effects when criminals undertake dissembling activities which are a by-product of illegal activities, since increasing the maximum possible fine may increase or decrease the number of crimes committed and may increase or decrease the proportion of illegal gains hedged by criminals.
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.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 1575.
Date of creation: 12 Jan 2007
Date of revision:
deterrence; avoidance detection; dissembling activities; optimal enforcement of law;
Find related papers by JEL classification:
- D62 - Microeconomics - - Welfare Economics - - - Externalities
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
- K40 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - General
- D60 - Microeconomics - - Welfare Economics - - - General
This paper has been announced in the following NEP Reports:
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.:
- Garoupa, Nuno, 2001.
"Optimal magnitude and probability of fines,"
European Economic Review, Elsevier,
Elsevier, vol. 45(9), pages 1765-1771, October.
- Nuno Garoupa, 2000. "Optimal magnitude and probability of fines," Economics Working Papers, Department of Economics and Business, Universitat Pompeu Fabra 454, Department of Economics and Business, Universitat Pompeu Fabra.
- Polinsky, A Mitchell & Shavell, Steven, 1991.
"A Note on Optimal Fines When Wealth Varies among Individuals,"
American Economic Review, American Economic Association,
American Economic Association, vol. 81(3), pages 618-21, June.
- A. Mitchell Polinsky & Steven Shavell, 1990. "A Note on Optimal Fines When Wealth Varies Among Individuals," NBER Working Papers 3232, National Bureau of Economic Research, Inc.
- A. Mitchell Polinsky & Steven Shavell, 1999.
"The Economic Theory of Public Enforcement of Law,"
NBER Working Papers
6993, National Bureau of Economic Research, Inc.
- Bebchuk, Lucian Arye & Kaplow, Louis, 1993. "Optimal sanctions and differences in individuals' likelihood of avoiding detection," International Review of Law and Economics, Elsevier, Elsevier, vol. 13(2), pages 217-224, June.
- Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, Wiley Blackwell, vol. 11(3), pages 267-95, September.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.