Discussion Paper Details

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Title: Information, Corruption and Optimal Law Enforcement

Author(s): Nuno Garoupa and Mohamed Jellal

Publication Date: September 2002

Keyword(s): corruption, fine, information and probability of detection and punishment

Programme Area(s): Public Economics

Abstract: We consider the role of asymmetric information on the emergence of collusion between criminals and enforcers, in the framework proposed by Bowles and Garoupa (1997) and Polinsky and Shavell (2001). Our Paper proposes that the optimal criminal sanction for the underlying offense is not necessarily maximal. We achieve this result by coupling the criminal sanction for the underlying offense with a criminal sanction for corruption, both imposed on offenders. A higher criminal sanction for the underlying offense implies that the government must spend more resources to detect and punish corruption (since the likelihood of collusion increases). Thus, the government could reduce this sanction, save on detection, and increase the criminal sanction for corruption (in order to offset the negative effect on deterrence).

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Bibliographic Reference

Garoupa, N and Jellal, M. 2002. 'Information, Corruption and Optimal Law Enforcement'. London, Centre for Economic Policy Research.