Optimal Magnitude and Probability of Fines

Universitat Pompeu Fabra Working Paper No. 454

10 Pages Posted: 3 Aug 2000

See all articles by Nuno Garoupa

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty

Date Written: April 2, 2000

Abstract

The economic literature on crime and punishment focuses on the trade-off between probability and severity of punishment, and suggests that detection probability and fines are substitutes. In this paper it is shown that, in presence of substantial underdeterrence caused by costly detection and punishment, these instruments may become complements. When offenders are poor, the deterrent value of monetary sanctions is low. Thus, the government does not invest a lot in detection. If offenders are rich, however, the deterrent value of monetary sanctions is high, so it is more profitable to prosecute them.

Keywords: Crime, Probability and Severity of Sanctions, Law Enforcement

JEL Classification: K4

Suggested Citation

Garoupa, Nuno, Optimal Magnitude and Probability of Fines (April 2, 2000). Universitat Pompeu Fabra Working Paper No. 454. Available at SSRN: https://ssrn.com/abstract=230875 or http://dx.doi.org/10.2139/ssrn.230875

Nuno Garoupa (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

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