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Corruption and Optimal Law Enforcement

Journal of Public Economics

36 Pages Posted: 28 Aug 2000  

A. Mitchell Polinsky

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

Steven Shavell

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

Multiple version iconThere are 2 versions of this paper

Date Written: April 2000

Abstract

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

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

A. Mitchell Polinsky (Contact Author)

Stanford Law School ( email )

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National Bureau of Economic Research (NBER)

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Steven Shavell

National Bureau of Economic Research (NBER)

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United States

Harvard Law School ( email )

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