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The Private Enforcement of Law

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  • William M. Landes
  • Richard A. Posner

Abstract

An important question in the economic study of enforcement is the appropriate, and the actual, division of responsibilities between public and private enforcers. This question has been brought into sharp focus recently by an article in which Gary Becker and George Stigler advocate the privatization of law enforcement. In the present article, we explore the idea that the area in which private enforcement is in fact clearly preferable to public enforcement on efficiency grounds is more restricted than Becker and Stigler believe; perhaps the existing division of enforcement between the public and private sectors approximates the optimal division. Part I develops an economic model of competitive, profit-maximizing private enforcement. The model predicts the level of enforcement and the number of offenses that would occur in a world of exclusively private enforcement. Part II refines the model to account for the presence of monopoly in the private enforcement industry, different assignments of property rights in legal claims, the effect of taxing private enforcers, nonmonetary penalties, and legal errors - elements ignored in the initial development of the model in Part I. Part III contrasts our model with other economic approaches to the enforcement question. Part IV presents a number of positive implications of the model, relating to the choice between public and private enforcement of criminal versus civil laws, the assignment of exclusive rights to the victims of offenses, the budgets of public agencies, the discretionary nonenforcement of the law, and the legal treatment of blackmail and bribery. The positive implications of the model appear to be consistent with observations of the real world, although the findings in Part IV must be regarded as highly tentative. An appendix discusses the economics of rewards - an important method of compensating private enforcers.

Suggested Citation

  • William M. Landes & Richard A. Posner, 1974. "The Private Enforcement of Law," NBER Working Papers 0062, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:0062
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    Cited by:

    1. Polinsky, A. Mitchell & Shavell, Steven, 2007. "The Theory of Public Enforcement of Law," Handbook of Law and Economics, Elsevier.
    2. Elizabeth Robinson, 2004. "Wanted dead and alive: Are hunting and protection of endangered species compatible?," Development and Comp Systems 0409066, University Library of Munich, Germany.
    3. Alessandro Marra & Alessandro Sarra, 2010. "Incomplete antitrust laws and private actions for damages," European Journal of Law and Economics, Springer, vol. 30(2), pages 111-135, October.
    4. Nuno Garoupa & Mohamed Jellal, 2002. "A Note on Optimal Law Enforcement under Asymmetric Information," European Journal of Law and Economics, Springer, vol. 14(1), pages 5-13, July.
    5. Lewisch Peter G. & Ottone Stefania & Ponzano Ferruccio, 2011. "Free-Riding on Altruistic Punishment? An Experimental Comparison of Third-Party Punishment in a Stand-Alone and in an In-Group Environment," Review of Law & Economics, De Gruyter, vol. 7(1), pages 161-190, June.
    6. Avner Ben-Ner, 2006. "For-Profit, State and Non-Profit: How to Cut the Pie Among the Three Sectors," Chapters,in: Advancing Public Goods, chapter 2 Edward Elgar Publishing.
    7. A. Mitchell Polinsky & Steven Shavell, 2009. "Public Enforcement of Law," Chapters,in: Criminal Law and Economics, chapter 1 Edward Elgar Publishing.
    8. Tomáš Otáhal, 2011. "Is Bribery a Good Way to Improve Efficiency in Law Enforcement?," Acta Oeconomica Pragensia, University of Economics, Prague, vol. 2011(6), pages 65-79.
    9. A. Mitchell Polinsky & Steven Shavell, 2005. "Economic Analysis of Law," Discussion Papers 05-005, Stanford Institute for Economic Policy Research.
    10. A. Mitchell Polinsky & Yeon-Koo Che, 1991. "Decoupling Liability: Optimal Incentives for Care and Litigation," RAND Journal of Economics, The RAND Corporation, vol. 22(4), pages 562-570, Winter.
    11. Steven Shavell, 2003. "Economic Analysis of the General Structure of the Law," NBER Working Papers 9699, National Bureau of Economic Research, Inc.
    12. Becker, Gary S., 1992. "The Economic Way of Looking at Life," Nobel Prize in Economics documents 1992-1, Nobel Prize Committee.
    13. Marcel Boyer & Tracy R. Lewis & Wei Lin Liu, 2000. "Setting standards for credible compliance and law enforcement," Canadian Journal of Economics, Canadian Economics Association, vol. 33(2), pages 319-340, May.
    14. Polinsky, A. Mitchell & Shavell, Steven, 2001. "Corruption and optimal law enforcement," Journal of Public Economics, Elsevier, vol. 81(1), pages 1-24, July.
    15. Mohamed Jellal & Nuno Garoupa, 1999. "Optimal law enforcement under asymmetric information," Economics Working Papers 401, Department of Economics and Business, Universitat Pompeu Fabra.
    16. A. Mitchell Polinsky, 1986. "Detrebling versus Decoupling Antitrust Damages: Lessons from the Theory of Enforcement," NBER Working Papers 1846, National Bureau of Economic Research, Inc.

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