Overdeterrence of Repeat Offenders When Penalties for First-Time Offenders are Restricted

18 Pages Posted: 17 Nov 2014

See all articles by Daniel Müller

Daniel Müller

University of Bonn; Queensland University of Technology

Patrick W. Schmitz

University of Cologne; Centre for Economic Policy Research (CEPR)

Date Written: November 2014

Abstract

When penalties for first-time offenders are restricted, it is typically optimal for the lawmaker to overdeter repeat offenders. First-time offenders are then deterred not only by the (restricted) fine for a first offense, but also by the prospect of a large fine for a subsequent offense. Now suppose the restriction on penalties for first-time offenders is relaxed; i.e., larger fines for a first offense become enforceable. Should overdeterrence of repeat offenders now be reduced? We show that this is the case only if the original restriction was not very strong. Otherwise, overdeterrence of repeat offenders should actually be further amplified.

Keywords: incentives, law enforcement, limited liability, penalties, repeat offenders

JEL Classification: D82, H23, K14, K42, L51

Suggested Citation

Müller, Daniel and Schmitz, Patrick W., Overdeterrence of Repeat Offenders When Penalties for First-Time Offenders are Restricted (November 2014). CEPR Discussion Paper No. DP10249. Available at SSRN: https://ssrn.com/abstract=2526362

Daniel Müller (Contact Author)

University of Bonn ( email )

Regina-Pacis-Weg 3
Postfach 2220
Bonn, D-53012
Germany

Queensland University of Technology ( email )

2 George Street
Brisbane, Queensland 4000
Australia

Patrick W. Schmitz

University of Cologne ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

HOME PAGE: http://schmitz.uni-koeln.de/index.php?s=mitarbeiter&t=schmitz

Centre for Economic Policy Research (CEPR)

London
United Kingdom

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