Working Paper: CEPR ID: DP3560
Authors: Nuno Garoupa; Mohamed Jellal
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).
Keywords: corruption; fine; information; probability of detection; punishment
JEL Codes: K40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| sanction structure (P37) | detection costs for corruption (H57) |
| sanction for underlying offense (K42) | detection costs for corruption (H57) |
| sanction for underlying offense (K42) | sanction for corruption (H57) |
| fine for underlying offense (K42) | likelihood of corruption (H57) |
| sanction for corruption (H57) | deterrence (K42) |