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Monitoring vis-á-vis Investigation in Enforcement of Law
Dilip Mookherjee and I. P. L. Png
The American Economic Review
Vol. 82, No. 3 (Jun., 1992), pp. 556-565
Published by: American Economic Association
Stable URL: http://www.jstor.org/stable/2117321
Page Count: 10
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Enforcement by monitoring cannot be conditioned on the severity of an offense while enforcement by investigation can be. If some degrees of the offense are not adequately reported or if investigation is too costly, the regulator must monitor and treat offenses of different severity quite differently. Smaller offenses should not be investigated; they should be deterred by monitoring alone, coupled with graduated fines. To deter larger offenses, the regulator should vary the investigation rate while setting maximal fines.
The American Economic Review © 1992 American Economic Association