Question

In Becker (1968) it is argued that maximal sanctions are required for maximal deterrence.

A) Outline the conditions necessary for this argument to hold. After your outline, describe recent advances in the law and economics literature that build off the Becker model. Do these new approaches still endorse the maximal sanctions argument? Why or why not?

B) Do you think the maximal sanctions argument developed in Becker is applicable to antitrust litigation? Why or why not?

Answer 1

A) A necessary condition for beckers theory of maximal sanctions is that the law enforcers are aware of the type of the criminal i.e. the probability with which he may be caught. If they are not aware of the type of the criminals, the ones who are easy to be caught are overdeterred and could have been prevented with a less severe penalty. Another condition is that the law enforcers are sure that the convicted person has actually committed the crime. In the absence of such knowledge, they may penalise innocent people and the maximal deterrence theory may prove to be unjust in such situations.

Becker's theory has been heavily criticised by many others like Stigler and others. They argue that the assumptions of becker's model only hold in theory and are not true for all practical purposes. It has also been argued that maximal deterrence may not distinguish different types of crimes and the extent of severity involved. By treating all crimes as equal it penalises petty crimes and heinous crimes with the same maximal penalty. This may also encourage criminals to commit a more severe crime even though they intended to commit a less severe one since the penalty is same. In case of fines, the highest fine has to be less than the wealth of the penalised individual. Otherwise, the fine makes no sense at all. However, there is also a strand of argument that says that maximal deterrence may be cost effective in some situations. For example, capital punishment is less costly as compared to life imprisonment. But in most cases, the theory doesn't seem to be correct.

B) Maximal deterrence may not be applicable in case of antitrust litigations since they are very complex in nature and justifying them requires detailed market analysis by the law enforcers. Since the information availability is costly, it is very difficult and unviable to fulfill the assumptions of becker's theory. Further, the extent to which mergers and monopolies are market distorting is a point of contention, with some economists believing that the market corrects itself and severe penalty is not justified.