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A. Mitchell Polinsky & Steven M. Shavell, Public Enforcement of Law, in The New Palgrave Dictionary of Economics (Steven N. Durlauf & Lawrence E. Blume eds., 2nd ed. 2008).

Abstract: This article surveys the economic analysis of public enforcement of law – the use of public agents (inspectors, tax auditors, police, prosecutors) to detect and to sanction violators of legal rules. We first discuss the basic elements of the theory: the probability of imposition of sanctions, the magnitude and form of sanctions (fines, imprisonment), and the rule of liability. We then examine a variety of extensions, including the costs of imposing fines, mistakes, marginal deterrence, settlement, self-reporting, repeat offences, and incapacitation.