The Structure of Fines in the Light of Political Competition

Why infractions to some environmental legislations (protection of natural habitats) or antitrust law (collusion) are punished with fines based on damages, while other kinds of offenses (lack of adequate permits; cartels) are punished per se? This paper analyzes the determinants of public law enforcement policies when citizens vote for the timing and level of fines. We consider situations where citizens and politicians disagree on the value of the expected social harm associated with some activities. We find that a strong law enforcement equilibrium (high level of deterrence) emerges when citizens expect a high level of harm. On the reverse, a weak law enforcement equilibrium emerges when citizens expect a low level of harm. Furthermore, citizens vote for act-based (respectively harm-based) sanctions when they expect a level of harm lower than that of the government (respectively higher).