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Subgame Perfect Punishment for Repeat Offenders

  • Winand Emons

First we show that for wealth-constrained agents who may commit an act twice the optimal sanctions are the offender's entire wealth for the first and zero for the second crime. Then we ask the question whether this decreasing sanction scheme is subgame perfect (time consistent), i.e., does a rent-seeking government stick to this sanction scheme after the first crime has occurred. If the benefit and/or the harm from the crime are not too large, this is indeed the case; otherwise, equal sanctions for both crimes are optimal.

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File URL: http://www.vwl.unibe.ch/papers/dp/dp0211.pdf
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Paper provided by Universitaet Bern, Departement Volkswirtschaft in its series Diskussionsschriften with number dp0211.

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Date of creation: Oct 2002
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Handle: RePEc:ube:dpvwib:dp0211
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  1. Robin W. Boadway & Michael Keen, 1993. "Evasion and Time Consistency in the Taxation of Capital Income," Working Papers 890, Queen's University, Department of Economics.
  2. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
  3. Burnovski, Moshe & Safra, Zvi, 1994. "Deterrence effects of sequential punishment policies: Should repeat offenders be more severely punished?," International Review of Law and Economics, Elsevier, vol. 14(3), pages 341-350, September.
  4. Nuno Garoupa & Daniel Klerman, 2002. "Optimal Law Enforcement with a Rent-Seeking Government," American Law and Economics Review, Oxford University Press, vol. 4(1), pages 116-140, January.
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