Productive and Dynamic Inefficiencies of Moderate Regulatory Sanctions
- Author(s): Tim Friehe, Murat Mungan
- Date Posted: 2019
- Law & Economics #: 19-07
- Availability: Full text (most recent) on SSRN
This article shows that moderate regulatory sanctions can generate subtle problems not apparent in simple enforcement models. Assuming that firms may ultimately face different noncompliance detection probabilities, we highlight that moderate sanctions may conflict with aspects of both static and dynamic efficiency.