Optimal magnitude and probability of fines
AbstractThe 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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Bibliographic InfoPaper provided by Department of Economics and Business, Universitat Pompeu Fabra in its series Economics Working Papers with number 454.
Date of creation: Apr 2000
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Crime; probability and severity of sanctions; law enforcement;
Other versions of this item:
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
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