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In: Economics

Explain the concept of marginal deterrence and give an example of how increasing the punishment for...

Explain the concept of marginal deterrence and give an example of how increasing the punishment for an offense might have an unintended consequence.

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Answer:-

"Marginal Deterrence" in simple terms means that penalties are set for the offenders such that more severe act receive more severe punishment and less severe crime receive less severe punishment. It prevents the criminal from committing highly unbearable crime. But this concept has a loophole; which will unintentionally allow criminals to cntinue commitind crimes and other offensive acts which are not much harmful.

For example:- If a chemical manufacturing unit is allowed to let out upto 30% of its waste in nearby sea at $50000 penalty per year and is charged with penalty of $80000 per year for releasing more than 30% in the sea , it is deterred from causing much harm to the sea but it will always keep letting out atleast 30% of its waste in the sea thereby polluting it continuously by that much amount. Because the unit has to run its business so it will keep on with $50000 penalty

There are 2 types of deterrence:

1. Specifice Deterrence: the individual is himself punished and is deterred to carry out the similar offence in future. for example - you are debarred from giving exams if you are caught copying. Next time you will fear copying.

2. General Deterrence: the individual is punished and other people will be deterred to carry out the similar offence. For example - you are debarred from giving exams and other students will fear that they might also get punishment; so they will refrain themselves from copying.

There are three components of Marginal deterrence : - Certainty, celerity and severity.

Increasing the punishment for an offence can have unintended consequence. lets repeat our above example of chemical manufacturing unit. if the punishment is increased to $70000 for 30% of its waste the the unit will become indifferent about the penalty of $70000 and $80000. And now it will be incentivised to let out all its waste into the sea.


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