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On the Ambiguous Effects of Repression

Eric Langlais

No 2008-40, EconomiX Working Papers from University of Paris Nanterre, EconomiX

Abstract: The purpose of this note is to investigate the optimal enforcement of the penal code when criminals invest in a specific class of avoidance activities termed dissembling activities (i.e. self-protection efforts undertaken by criminals to hedge their illegal gains in case of detection and arrestation). We show that the penal law may have two different screening effects: it may separate the population of potential criminals between those who commit the crime and those who do not, and in the former group, between those who undertake dissembling efforts and those who do not. Then, we show that it is never optimal to use less than the maximal fine in contrast to what may occur with avoidance detection (i.e. efforts undertaken in order to reduce the probability of arrestation: MALIK [1990]); and furthermore, that the optimal penal code may imply overdeterrence. Finally, we show that any reform of the penal code has ambiguous effects when criminals undertake dissembling activities which are a by-product of illegal activities, since increasing the maximum possible fine may increase or decrease the number of crimes committed and may increase or decrease the proportion of illegal gains hedged by criminals.

Keywords: deterrence; dissembling activities; optimal enforcement of law (search for similar items in EconPapers)
JEL-codes: D81 K42 (search for similar items in EconPapers)
Pages: 16 pages
Date: 2008
New Economics Papers: this item is included in nep-cta, nep-law and nep-reg
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