What you don't see can't hurt you: an economic analysis of morality laws
. Efficiency requires discretion by the individual who engages in such activities. When discretion is difficult to regulate directly, the activities can instead be proscribed, thereby giving individuals incentive to hide their actions from others. We find conditions for the first-best levels of consumption and hiding to be implementable. Since some level of activity is efficient, the optimal sanctions are not maximal.
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Volume (Year): 41 (2008)
Issue (Month): 2 (May)
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