Monitoring vis-a-vis Investigation in Enforcement of Law

Dilip Mookherjee and Ivan Png

American Economic Review, 1992, vol. 82, issue 3, 556-65

Abstract: Enforcement by monitoring cannot be conditioned on the severity of an offense while enforcement by investigation can be. If some degrees of the offenses are not adequately reported or if investigation is too costly, the regulator must monitor and treat offenses of different severity quite differently. Smaller offenses should not be investigated; they should be deterred by monitoring alone, coupled with graduated fines. To deter larger offenses, the regulator should vary the investigation rate while setting maximal fines. Copyright 1992 by American Economic Association.

Date: 1992
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