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The Theory of Penalties and the Economics of Criminal Law

Review of Law & Economics, Vol. 1, No. 2, Article 1

Posted: 11 Oct 2005  

Keith N. Hylton

Boston University - School of Law

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Abstract

This paper presents a model of penalties that reconciles the conflicting accounts of optimal punishment by Becker, who argued penalties should internalize social costs, and Posner, who suggested penalties should completely deter offenses. The model delivers specific recommendations as to when penalties should be set to internalize social costs and when they should be set to completely deter offensive conduct. One basic recommendation is that whenever the cost of transacting with respect to some entitlement is less than the cost of enforcing the right to that entitlement, penalties should be set to completely deter. I use the model to generate a positive account of the function and scope of criminal law doctrines, such as intent, necessity, and rules governing the distinction between torts and crimes. The model is also consistent with the history of criminal penalties set out by Adam Smith.

Keywords: internalization, deterrence, optimal penalties, punitive damages, law enforcement, necessity doctrine, criminal intent

JEL Classification: K, K00, K14, K13, K41, K42

Suggested Citation

Hylton, Keith N., The Theory of Penalties and the Economics of Criminal Law. Review of Law & Economics, Vol. 1, No. 2, Article 1. Available at SSRN: https://ssrn.com/abstract=813844

Keith N. Hylton (Contact Author)

Boston University - School of Law ( email )

765 Commonwealth Avenue
Boston, MA 02215
United States
617-353-8959 (Phone)
617-353-3077 (Fax)

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