On the Optimality of Nonmaximal Fines in the Presence of Corruptible Enforcers

In this paper, we develop a model of law enforcement with the possibility of corruption between enforcers and potential offenders. We study how the violation rate changes withthe level of the fine imposed on violations. We find, in contrast to the conventional wisdom, that the fine level that minimizes violations can be intermediate rather than large. We then study conditions under which different fine levels would be optimal. Link to the article

CELIK, G. and SAYAN, S. (2008). On the Optimality of Nonmaximal Fines in the Presence of Corruptible Enforcers. Review of Economic Design, 12(3), pp. 209-227.