Ch33Law and Economics(微观-范里安-(上海交通大学,赵旭 ).pptVIP

Chapter Thirty-Three Law and Economics Effects of Laws Property right assignments affect asset, income and wealth distributions; e.g. nationalized vs. privately owned industry. Effects of Laws Property right assignments affect asset, income and wealth distributions; e.g. nationalized vs. privately owned industry. resource allocations; e.g. the tragedy of the commons e.g. patents encourage research. Effects of Laws Punishments affect incentives for illegal behavior; e.g. high speeding fines can reduce the amount of speeding. Effects of Laws Punishments affect incentives for illegal behavior; e.g. high speeding fines can reduce the amount of speeding. asset, income and wealth distributions; e.g. jail time results in lost income. Crime and Punishment x is the quantity of an illegal activity produced by an individual. C(x) is the production cost. B(x) is the benefit. Gain is B(x) - C(x). What is the rational choice of x? Crime and Punishment Crime and Punishment Crime and Punishment Crime and Punishment Crime and Punishment Crime and Punishment Detection of a criminal is uncertain. e is police effort. ?(e) is detection probability; ?(e) = 0 if e = 0 ?(e) ? as e ?. Crime and Punishment Given e, the criminal’s problem is Crime and Punishment Given e, the criminal’s problem is First-order condition is Crime and Punishment Given e, the criminal’s problem is First-order condition is Low e ? low ?(e) ? low marg. cost. High e ? high ?(e) ? high marg. cost. Crime and Punishment Crime and Punishment Higher fines and larger police effort both raise marginal production costs of illegal activity. Which is better for society -- higher fines, or more police effort? Crime and Punishment Higher fines and larger police effort both raise marginal production costs of illegal activity. Which is better for society -- higher fines, or more police effort? Police effort consumes resources; higher fines do not. Better to fine heavily. Liability Law An injurer, IN, and a vic