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The Theory of Public Enforcement of Law


A. Mitchell Polinsky


Stanford Law School; National Bureau of Economic Research (NBER)

Steven Shavell


Harvard Law School; National Bureau of Economic Research (NBER)


HANDBOOK OF LAW AND ECONOMICS, A. Mitchell Polinsky, Steven Shavell, eds., Vol. 1, 2006
Harvard Law and Economics Discussion Paper No. 529
Stanford Law and Economics Olin Working Paper No. 313
Stanford Public Law Working Paper No. 115
Harvard Public Law Working Paper No. 119

Abstract:     
This chapter of the forthcoming Handbook of Law and Economics surveys the theory of the public enforcement of law - the use of governmental agents (regulators, inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. The theoretical core of our analysis addresses the following basic questions: Should the form of the sanction imposed on a liable party be a fine, an imprisonment term, or a combination of the two? Should the rule of liability be strict or fault-based? If violators are caught only with a probability, how should the level of the sanction be adjusted? How much of society's resources should be devoted to apprehending violators? We then examine a variety of extensions of the central theory, including: activity level; errors; the costs of imposing fines; general enforcement; marginal deterrence; the principal-agent relationship; settlements; self-reporting; repeat offenders; imperfect knowledge about the probability and magnitude of sanctions; corruption; incapacitation; costly observation of wealth; social norms; and the fairness of sanctions.

Number of Pages in PDF File: 82

Keywords: public enforcement of law, fines, imprisonment, strict liability, fault-based liability, probability of detection, errors, general enforcement, marginal deterrence, settlements, self-reporting, repeat offenders, fairness of sanctions, norms

JEL Classification: D23, D62, D63, H23, H26, K14, K42, L51

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Date posted: November 17, 2005  

Suggested Citation

Polinsky, A. Mitchell and Shavell, Steven, The Theory of Public Enforcement of Law. HANDBOOK OF LAW AND ECONOMICS, A. Mitchell Polinsky, Steven Shavell, eds., Vol. 1, 2006; Harvard Law and Economics Discussion Paper No. 529; Stanford Law and Economics Olin Working Paper No. 313; Stanford Public Law Working Paper No. 115; Harvard Public Law Working Paper No. 119. Available at SSRN: http://ssrn.com/abstract=850264

Contact Information

A. Mitchell Polinsky
Stanford Law School ( email )
559 Nathan Abbott Way
Stanford, CA 94305-8610
United States
650-723-0886 (Phone)
650-723-3557 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Steven Shavell (Contact Author)
Harvard Law School ( email )
1575 Massachusetts
Hauser 406
Cambridge, MA 02138
United States
617-495-3668 (Phone)
617-496-2256 (Fax)
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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