Optimal magnitude and probability of fines

Document Type

Article

Publication Date

1-2001

Journal Title

European Economic Review

ISSN

0014-2921

DOI

10.1016/S0014-2921(00)00084-2

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.

First Page

1765

Last Page

1771

Num Pages

7

Volume Number

45

Issue Number

9

Publisher

Elsevier

Link to Full Text

Share

COinS