Optimal Law Enforcement with a Rent-Seeking Government

Abstract

The article analyzes public and private law enforcement when the government is motivated partially or entirely by rent-seeking. The model compares and contrasts the optimal law enforcement policies chosen by a benevolent, social welfare-maximizing government and a self-interested, rent-seeking government. The principal difference between these two kinds of governments is that a rent-seeking government seeks primarily to maximize revenue, while a welfare-maximizing government seeks primarily to deter socially harmful behavior. Among the central results of the paper are: (1) If offenders have sufficient wealth, a rent-seeking government is more aggressive in enforcing laws against minor crimes, while it is more lax in enforcing laws against major crimes. (2) Whether the government's objective is welfare maximization, rent maximization, or some combination of the two, competitive private enforcement is always at least as good and usually better than monopolistic private enforcement. (3) The choice between competitive private enforcement and public enforcement depends on which is cheaper and on whether the government seeks to completely deter offenses.