Economics at your fingertips  

Graduated penalty scheme

Mehmet Bac and Parimal Bag

International Review of Law and Economics, 2009, vol. 29, issue 4, 281-289

Abstract: Evaders of any dues such as local council tax, motor vehicle tax, tv license fees, etc., if detected, can pay promptly the dues plus any fine or postpone, which usually means a larger fine, and potentially imprisonment if payments are not made in full. Dominant among the likely reasons for this graduated penalty scheme are 'default tracking costs' and 'imprisonment costs'. Although in conflict with the state's basic objective of deterring evasion, a graduated penalty scheme may emerge as an optimal balance between the dual objectives of deterrence and settlement delay minimization. Based on a welfare-maximizing objective where the state determines optimal monitoring intensity and time profile of fines, an intuitively plausible condition is derived such that the fine scheme is of the graduated type.

Keywords: Evasion/crime; Fine; default; Graduated; penalty (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link)
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Access Statistics for this article

International Review of Law and Economics is currently edited by C. Ott, A. W. Katz and H-B. Schäfer

More articles in International Review of Law and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().

Page updated 2023-03-26
Handle: RePEc:eee:irlaec:v:29:y:2009:i:4:p:281-289