Optimal Deterrence with Legal Defense Expenditure

Hugh Gravelle and Nuno Garoupa

Economic Inquiry, 2002, vol. 40, issue 3, 366-379

Abstract: Legal defense expenditure by honest and dishonest accused can increase or reduce the amount of crime, and deterrence can decrease when punishment is increased. Unregulated expenditure of innocent and guilty defendants is inefficient whether or not there is a direct social harm from type I and II errors. The circumstances in which the optimal fine bankrupts convicted dishonest or honest defendants, regulation to limit defense expenditure and a tax-financed public defender system are also investigated. Copyright 2002, Oxford University Press.

Date: 2002
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