The Theory of Public Enforcement of Law

82 Pages Posted: 17 Nov 2005  

A. Mitchell Polinsky

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

Steven Shavell

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

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Abstract

This chapter of the forthcoming Handbook of Law and Economics surveys the theory of the public enforcement of law - the use of governmental agents (regulators, inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. The theoretical core of our analysis addresses the following basic questions: Should the form of the sanction imposed on a liable party be a fine, an imprisonment term, or a combination of the two? Should the rule of liability be strict or fault-based? If violators are caught only with a probability, how should the level of the sanction be adjusted? How much of society's resources should be devoted to apprehending violators? We then examine a variety of extensions of the central theory, including: activity level; errors; the costs of imposing fines; general enforcement; marginal deterrence; the principal-agent relationship; settlements; self-reporting; repeat offenders; imperfect knowledge about the probability and magnitude of sanctions; corruption; incapacitation; costly observation of wealth; social norms; and the fairness of sanctions.

Keywords: public enforcement of law, fines, imprisonment, strict liability, fault-based liability, probability of detection, errors, general enforcement, marginal deterrence, settlements, self-reporting, repeat offenders, fairness of sanctions, norms

JEL Classification: D23, D62, D63, H23, H26, K14, K42, L51

Suggested Citation

Polinsky, A. Mitchell and Shavell, Steven, The Theory of Public Enforcement of Law. HANDBOOK OF LAW AND ECONOMICS, A. Mitchell Polinsky, Steven Shavell, eds., Vol. 1, 2006; Harvard Law and Economics Discussion Paper No. 529; Stanford Law and Economics Olin Working Paper No. 313; Stanford Public Law Working Paper No. 115; Harvard Public Law Working Paper No. 119. Available at SSRN: https://ssrn.com/abstract=850264

A. Mitchell Polinsky

Stanford Law School ( email )

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National Bureau of Economic Research (NBER)

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Steven Shavell (Contact Author)

National Bureau of Economic Research (NBER)

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Harvard Law School ( email )

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