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Optimal Deterrence with Legal Defence Expenditure

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  • Hugh Gravelle
  • Nuno Garoupa

Abstract

Legal defence expenditure by those accused of a crime reduces their probability of punishment (whether innocent and guilty). We show that there could be more or less crime in a system which permits such expenditure. Because accused may choose a level of defence expenditure which bankrupts them if found guilty, deterrence can decrease when the fine is increased. The unregulated expenditure of innocent and guilty defendants is inefficient. We show that the optimal fine will never bankrupt the dishonest accused but that the honest accused can be bankrupt or left with positive wealth if convicted. We examine policies to regulate defence expenditure including a tax financed public defender system, a tax on legal defence and compensation for acquitted accused.

Suggested Citation

  • Hugh Gravelle & Nuno Garoupa, "undated". "Optimal Deterrence with Legal Defence Expenditure," Discussion Papers 00/08, Department of Economics, University of York.
  • Handle: RePEc:yor:yorken:00/08
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    Cited by:

    1. Lambert Eve-Angéline & Chappe Nathalie, 2014. "Litigation with Legal Aid versus Litigation with Contingent/Conditional Fees," Review of Law & Economics, De Gruyter, vol. 10(1), pages 1-21, March.
    2. Šastitko, Andrej E., 2013. "Effects of third party errors," EconStor Preprints 121747, ZBW - Leibniz Information Centre for Economics.
    3. Giuseppe Dari-Mattiacci & Gerrit De Geest, 2005. "Judgment Proofness under Four Different Precaution Technologies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 161(1), pages 38-56, March.
    4. Tim Friehe & Thomas J. Miceli, 2018. "On the role of the exclusionary rule for optimal law enforcement effort," Journal of Public Economic Theory, Association for Public Economic Theory, vol. 20(5), pages 757-767, October.
    5. Juranek, Steffen, 2018. "Investing in legal advice," Information Economics and Policy, Elsevier, vol. 44(C), pages 28-46.
    6. Shastitko, A., 2011. "Errors of I and II Types in Economic Exchanges with Third Party Enforcement," Journal of the New Economic Association, New Economic Association, issue 10, pages 125-148.
    7. Echazu, Luciana & Garoupa, Nuno, 2012. "Why not adopt a loser-pays-all rule in criminal litigation?," International Review of Law and Economics, Elsevier, vol. 32(2), pages 233-241.
    8. Nuno Garoupa & Hugh Gravelle, 2003. "Efficient Deterrence does not Require that the Wealthy should be Able to Buy Justice," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 159(3), pages 545-552, September.
    9. Nuno Garoupa & Hugh Gravelle, "undated". "Does Efficient Deterrence Require that the Wealthy Should Be Able to Buy Justice?," Discussion Papers 00/07, Department of Economics, University of York.
    10. Garoupa, Nuno & Stephen, Frank, 2003. "A Note on Optimal Law Enforcement with Legal Aid," CEPR Discussion Papers 4113, C.E.P.R. Discussion Papers.
    11. Shastitko, Andrey, 2014. "Effects of the Third Party Errors," Published Papers re9021, Russian Presidential Academy of National Economy and Public Administration.
    12. Neil Rickman & Dionisia Tzavara, 2005. "Optimal Pricing of Court Services," European Journal of Law and Economics, Springer, vol. 20(1), pages 31-41, July.
    13. Nuno Garoupa & Jonathan Klick & Francesco Parisi, 2006. "A law and economics perspective on terrorism," Public Choice, Springer, vol. 128(1), pages 147-168, July.
    14. Giuseppe Dari‐Mattiacci & Barbara M. Mangan, 2008. "Disappearing Defendants versus Judgment‐Proof Injurers," Economica, London School of Economics and Political Science, vol. 75(300), pages 749-765, November.

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    More about this item

    Keywords

    Legal defence; deterrence; legal aid;
    All these keywords.

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L51 - Industrial Organization - - Regulation and Industrial Policy - - - Economics of Regulation

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