Design and Enforcement of Legal Standards
نویسندگان
چکیده
Laws are costly to enforce. We explore the implications of this principle in a model where the design of the laws and their enforcement are determined jointly. A benevolent government trades off the benefit of a stricter legal standard with the cost of its enforcement. Therefore, legal standards and enforcement are complements, and increase in aggregate wealth. If bureaucrats are corruptible, the optimal legal standard is lower. With a self-interested government legal standards may be increasing in corruption, according to the “toll-booth view”. International evidence on environmental regulation shows that standards are correlated positively with enforcement and negatively with corruption.
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