Premium
DIFFERENTIATING BETWEEN FIRST AND REPEAT OFFENSES
Author(s) -
McCAN BRYAN C.
Publication year - 2009
Publication title -
contemporary economic policy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.454
H-Index - 49
eISSN - 1465-7287
pISSN - 1074-3529
DOI - 10.1111/j.1465-7287.2008.00111.x
Subject(s) - sanctions , enforcement , punishment (psychology) , regulator , welfare , population , economics , public economics , business , microeconomics , law , political science , psychology , social psychology , biology , market economy , biochemistry , gene , demography , sociology
I present a model where a regulator monitors compliance with a policy by a population of individuals, some of whom repeatedly prefer to violate the policy, while others only occasionally want to experiment. I show that the regulator can use sanctions, contingent on past violations of the policy, to differentiate between the agents and to improve welfare. Such punishment plans arise frequently in practice. As a result, a regulator prefers investing in enforcement rather than use maximal sanctions. ( JEL K42, K14, L51)