Optimal Deterrence with Legal Defence Expenditure
AbstractLegal defence expenditure by those accused of a crime reduces their probability of punishment (whether innocent and guilty). We show that there could be more or less crime in a system which permits such expenditure. Because accused may choose a level of defence expenditure which bankrupts them if found guilty, deterrence can decrease when the fine is increased. The unregulated expenditure of innocent and guilty defendants is inefficient. We show that the optimal fine will never bankrupt the dishonest accused but that the honest accused can be bankrupt or left with positive wealth if convicted. We examine policies to regulate defence expenditure including a tax financed public defender system, a tax on legal defence and compensation for acquitted accused.
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Legal defence; deterrence; legal aid;
Other versions of this item:
- K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
- L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation
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