Optimal Deterrence with Legal Defence Expenditure

Hugh Gravelle and Nuno Garoupa

Discussion Papers from Department of Economics, University of York

Abstract: Legal defence expenditure by those accused of a crime reduces their probability of punishment (whether innocent and guilty). We show that there could be more or less crime in a system which permits such expenditure. Because accused may choose a level of defence expenditure which bankrupts them if found guilty, deterrence can decrease when the fine is increased. The unregulated expenditure of innocent and guilty defendants is inefficient. We show that the optimal fine will never bankrupt the dishonest accused but that the honest accused can be bankrupt or left with positive wealth if convicted. We examine policies to regulate defence expenditure including a tax financed public defender system, a tax on legal defence and compensation for acquitted accused.

Keywords: Legal defence; deterrence; legal aid (search for similar items in EconPapers)
JEL-codes: K42 L51 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (5)

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Journal Article: Optimal Deterrence with Legal Defense Expenditure (2002)
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Persistent link: https://EconPapers.repec.org/RePEc:yor:yorken:00/08

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