Optimal magnitude and probability of fines

N. Garoupa

Research output: Contribution to journalArticlepeer-review

Abstract

The economic literature on crime and punishment focuses on the trade-off between probability and severity of punishment, and suggests that detection probability and fines are substitutes. In this paper, it is shown that, in the presence of substantial underdeterrence caused by costly detection and punishment, these instruments may become complements. When offenders are poor, the deterrent value of monetary sanctions is low. Thus, the government does not invest a lot in detection. If offenders are rich, however, the deterrent value of monetary sanctions is high, so it is more profitable to prosecute them. © 2001 Elsevier Science B.V. All rights reserved.
Original languageEnglish
Pages (from-to)1765-1771
Number of pages6
JournalEuropean Economic Review
Volume45
Issue number9
DOIs
Publication statusPublished - 2001

Keywords

  • Crime
  • Law enforcement
  • Probability and severity of sanctions

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