Journal of Public Economics
36 Pages Posted: 28 Aug 2000
Date Written: April 2000
We analyze corruption in law enforcement: the payment of bribes to enforcement agents, threats to frame innocent individuals in order to extort money from them, and the actual framing of innocent individuals. Bribery, extortion, and framing reduce deterrence and are thus worth discouraging. Optimal penalties for bribery and framing are maximal, but, surprisingly, extortion should not be sanctioned. The state may also combat corruption by paying rewards to enforcement agents for reporting violations. Such rewards can partially or completely mitigate the problem of bribery, but they encourage framing. The optimal reward may be relatively low to discourage extortion and framing, or relatively high to discourage bribery.
JEL Classification: K14, K42
Suggested Citation: Suggested Citation
Polinsky, A. Mitchell and Shavell, Steven, Corruption and Optimal Law Enforcement (April 2000). Journal of Public Economics. Available at SSRN: https://ssrn.com/abstract=196529 or http://dx.doi.org/10.2139/ssrn.196529