Optimal Marginal Deterrence and Incentives for Precaution

Lionel Thomas ()
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Lionel Thomas: CRESE - Centre de REcherches sur les Stratégies Economiques (UR 3190) - UFC - Université de Franche-Comté - UBFC - Université Bourgogne Franche-Comté [COMUE]

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Abstract: This paper studies marginal deterrence in the presence of a basic and an aggravated harm when the occurrence of the latter may be reduced by criminals exerting costly precaution. We determine the optimal probability of fines when the enforcement authority provides incentives such that, if criminals commit offenses, they exert precaution. We show that marginal deterrence is fully optimal, even for severe basic harms. That is, the fine associated with the basic harm is not equal to the maximal sanction, the criminal's wealth. Moreover, implementing marginal deterrence leads to the use of fines and the probability of being caught and sanctioned in a different way compared to Becker's well-known result.

Date: 2015-01-01
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Published in Review of Law & Economics, 2015, 11 (3), ⟨10.1515/rle-2012-0009⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04526562

DOI: 10.1515/rle-2012-0009

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