A Note on Optimal Fines When Wealth Varies among Individuals
An 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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Volume (Year): 81 (1991)
Issue (Month): 3 (June)
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References listed on IDEAS
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.:
- 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.
- Gary S. Becker, 1968.
"Crime and Punishment: An Economic Approach,"
Journal of Political Economy,
University of Chicago Press, vol. 76, pages 169.
- 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.
- Louis Kaplow, 1989. "The Optimal Probability and Magnitude of Fines for Acts that Definitely are Undesirable," NBER Working Papers 3008, National Bureau of Economic Research, Inc.
- Polinsky, Mitchell & Shavell, Steven, 1979. "The Optimal Tradeoff between the Probability and Magnitude of Fines," American Economic Review, American Economic Association, vol. 69(5), pages 880-91, December.
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