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Optimal Magnitude and Probability of Fines

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Author Info
Nuno Garoupa

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Abstract

The economic literature on crime and punishment focuses on the trade-off between probability and severity of punishment, and suggests that detection probability and fines are substitutes. In this paper it is shown that, in presence of substantial underdeterrence caused by costly detection and punishment, these instruments may become complements. When offenders are poor, the deterrent value of monetary sanctions is low. Thus, the government does not invest a lot in detection. If offenders are rich, however, the deterrent value of monetary sanctions is high, so it is more profitable to prosecute them.

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Publisher Info
Paper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 454.

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Date of creation: Apr 2000
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Handle: RePEc:upf:upfgen:454

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Related research
Keywords: Crime; probability and severity of sanctions; law enforcement;

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Find related papers by JEL classification:
K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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References listed on IDEAS
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  1. 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. [Downloadable!] (restricted)
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  2. A. Mitchell Polinsky & Steven Shavell, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March. [Downloadable!] (restricted)
    Other versions:
  3. Polinsky, A Mitchell & Shavell, Steven, 1992. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," Journal of Law & Economics, University of Chicago Press, vol. 35(1), pages 133-48, April.
    Other versions:
  4. A. Mitchell Polinsky & Steven Shavell, 1991. "A Note on Optimal Fines When Wealth Varies Among Individuals," NBER Working Papers 3232, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
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  5. Lewin, Jeff L. & Trumbull, William N., 1990. "The social value of crime?," International Review of Law and Economics, Elsevier, vol. 10(3), pages 271-284, December. [Downloadable!] (restricted)
  6. Shavell, Steven, 1987. "The Optimal Use of Nonmonetary Sanctions as a Deterrent," American Economic Review, American Economic Association, vol. 77(4), pages 584-92, September. [Downloadable!] (restricted)
  7. 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. [Downloadable!] (restricted)
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  8. Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Blackwell Publishing, vol. 11(3), pages 267-95, September. [Downloadable!] (restricted)
  9. Shavell, Steven, 1993. "The Optimal Structure of Law Enforcement," Journal of Law & Economics, University of Chicago Press, vol. 36(1), pages 255-87, April.
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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. Gorkem Celik & Serdar Sayan, 2008. "On the optimality of nonmaximal fines in the presence of corruptible law enforcers," Review of Economic Design, Springer, vol. 12(3), pages 209-227, September. [Downloadable!] (restricted)
  2. Langlais, Eric, 2008. "Deterrence of a criminal team: how to rely on its members' shortcomings?," MPRA Paper 14369, University Library of Munich, Germany. [Downloadable!]
    Other versions:
  3. Motchenkova, E., 2004. "Effects of leniency programs on cartel stability," Discussion Paper 98, Tilburg University, Center for Economic Research. [Downloadable!]
    Other versions:
  4. Eric Langlais, 2007. "Detection avoidance and deterrence: some paradoxical arithmetics," Working Papers of BETA 2007-06, Bureau d'Economie Théorique et Appliquée, ULP, Strasbourg. [Downloadable!]
    Other versions:
  5. Roman Horvath & Eva Kolomaznikova, 2002. "Individual Decision-Making to Commit a Crime: Early Models," Law and Economics 0210001, EconWPA. [Downloadable!]
  6. Eric Langlais, 2008. "On the Ambiguous Effects of Repression," EconomiX Working Papers 2008-40, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
  7. Langlais, Eric, 2009. "les criminels aiment-ils le risque ?
    [Are criminals risk-seeking individulas ?]
    ," MPRA Paper 14892, University Library of Munich, Germany. [Downloadable!]
  8. Leliefeld, D. & Motchenkova, E., 2007. "To Protect in Order to Serve: Adverse Effects of Leniency Programs in View of Industry Asymmetry," Discussion Paper 2007-007, Tilburg University, Tilburg Law and Economic Center. [Downloadable!]
    Other versions:
  9. Arguedas, Carmen & Rousseau, Sandra, 2009. "A Note on the Complementarity of Uniform Emission Standards and Monitoring Strategies," Working Papers in Economic Theory 2009/06, Universidad Autónoma de Madrid (Spain), Department of Economic Analysis (Economic Theory and Economic History). [Downloadable!]
  10. Langlais, Eric, 2007. "Too much or not enough crimes? On the ambiguous effects of repression," MPRA Paper 1575, University Library of Munich, Germany. [Downloadable!]
  11. Motchenkova, Evgenia & Laan, Rob van der, 2005. "Strictness of leniency programs and cartels of asymmetric firms," Discussion Paper 74, Tilburg University, Center for Economic Research. [Downloadable!]
  12. Motchenkova, E. & Kort, P.M., 2004. "Analysis of the properties of current penalty schemes for violations of antitrust law," Discussion Paper 97, Tilburg University, Center for Economic Research. [Downloadable!]
  13. Germani, Anna Rita & Morone, Andrea & Morone, Piergiuseppe, 2009. "Investigating Discretionary Environmental Enforcement: a pilot experiment," MPRA Paper 12735, University Library of Munich, Germany. [Downloadable!]
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