Paper #454

Título:

Optimal magnitude and probability of fines

Autor:

Nuno Garoupa

Data:

Abril 2000

Resumen:

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.

Palabras clave:

Crime, probability and severity of sanctions, law enforcement

Códigos JEL:

K4

Área de investigación:

Economía de la Empresa y Organización Industrial

Publicado en:

European Economic Review, 45, 9, (2001) pp. 1765-1771

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