A note on the non-maximality of the optimal fines when the apprehension probability depends on the offense rate

Jeong-Yoo Kim

European Journal of Law and Economics, 2013, vol. 36, issue 1, 138 pages

Abstract: This paper reconsiders the problem of optimal law enforcement when the apprehension probability depends on the offense rate as well as policing expenditures. A natural consequence of such an apprehension probability is the possible multiplicity of the equilibrium due to strategic complementarity, and the actual offense rate is realized by the self-fulfilling nature of the offense rate. If people believe that lowering the fine will lead to a lower offense rate, each individual will be less inclined to commit an illegal activity due to their expectation of a higher apprehension probability. Thus, the maximal fine is not socially optimal in this case. Copyright Springer Science+Business Media, LLC 2013

Keywords: Apprehension probability; Law enforcement; Self-fulfilling offense rate; Strategic complementarity; K42 (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:kap:ejlwec:v:36:y:2013:i:1:p:131-138

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DOI: 10.1007/s10657-012-9341-4

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