The Theory of Penalties and the Economics of Criminal Law
Keith N. Hylton
William Fairfield Warren Distinguished Professor, Boston University; Professor of Law, Boston University School of Law
Review of Law & Economics, Vol. 1, No. 2, Article 1
This paper presents a model of penalties that reconciles the conflicting accounts of optimal punishment by Becker, who argued penalties should internalize social costs, and Posner, who suggested penalties should completely deter offenses. The model delivers specific recommendations as to when penalties should be set to internalize social costs and when they should be set to completely deter offensive conduct. One basic recommendation is that whenever the cost of transacting with respect to some entitlement is less than the cost of enforcing the right to that entitlement, penalties should be set to completely deter. I use the model to generate a positive account of the function and scope of criminal law doctrines, such as intent, necessity, and rules governing the distinction between torts and crimes. The model is also consistent with the history of criminal penalties set out by Adam Smith.
Keywords: internalization, deterrence, optimal penalties, punitive damages, law enforcement, necessity doctrine, criminal intent
JEL Classification: K, K00, K14, K13, K41, K42Accepted Paper Series
Date posted: October 11, 2005
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