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Enforcement Costs and the Optimal Magnitude and Probability of Fines

  • Polinsky, A Mitchell
  • Shavell, Steven

Some of the costs of enforcing laws are fixed" - - in the sense that they do not depend on the number of individuals who commit harmful acts- -while other costs are "variable"- - they rise with the number of such individuals. This article analyzes the effects of fixed and variable enforcement costs on the optimal fine and the optimal probability of detection. It is shown that the optimal fine rises to reflect variable enforcement costs; that the optimal fine is not directly affected by fixed enforcement costs; and that the optimal probability depends on both types of enforcement costs.

(This abstract was borrowed from another version of this item.)

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Article provided by University of Chicago Press in its journal Journal of Law & Economics.

Volume (Year): 35 (1992)
Issue (Month): 1 (April)
Pages: 133-48

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Handle: RePEc:ucp:jlawec:v:35:y:1992:i:1:p:133-48
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  1. Gary S. Becker, 1974. "Crime and Punishment: An Economic Approach," NBER Chapters, in: Essays in the Economics of Crime and Punishment, pages 1-54 National Bureau of Economic Research, Inc.
  2. Shavell, Steven, 1991. "Specific versus General Enforcement of Law," Journal of Political Economy, University of Chicago Press, vol. 99(5), pages 1088-1108, October.
  3. Stigler, George J, 1970. "The Optimum Enforcement of Laws," Journal of Political Economy, University of Chicago Press, vol. 78(3), pages 526-36, May-June.
  4. Mitchell Polinsky, A. & Shavell, Steven, 1982. "Pigouvian taxation with administrative costs," Journal of Public Economics, Elsevier, vol. 19(3), pages 385-394, December.
  5. C. Eugene Steuerle, 1986. "Who Should Pay For Collecting Taxes," Books, American Enterprise Institute, number 650820, September.
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