Enforcement Costs and the Optimal Magnitude and Probability of Fines
A. Mitchell Polinsky
Some of the costs of enforcing laws are fixed" - - in the sense that they
do not depend on the number of individuals who commit harmful acts- -while
other costs are "variable"--they rise with the number of such individuals.
This article analyzes the effects of fixed and variable enforcement costs on
the optimal fine and the optimal probability of detection. It is shown that
the optimal fine rises to reflect variable enforcement costs; that the
optimal fine is not directly affected by fixed enforcement costs; and that
the optimal probability depends on both types of enforcement costs.
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