Overdeterrence of repeat offenders when penalties for first-time offenders are restricted

Patrick Schmitz

No 10249, CEPR Discussion Papers from Centre for Economic Policy Research

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 (search for similar items in EconPapers)
JEL-codes: D82 H23 K14 K42 L51 (search for similar items in EconPapers)
Date: 2014-11
New Economics Papers: this item is included in nep-law
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Related works:
Journal Article: Overdeterrence of repeat offenders when penalties for first-time offenders are restricted (2015)
Working Paper: Overdeterrence of repeat offenders when penalties for first-time offenders are restricted (2015)
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