Controlling Avoidance: Ex Ante Regulation Versus Ex Post Punishment.


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Efforts to avoid punishment are socially wasteful. Not only do they limit the deterrent effect of punishment, but they may actually lead to the paradoxical result that more severe punishment for crime induces more crime. The law has therefore constantly attempted to deter avoidance efforts and has designed various enforcement measures for this purpose. This paper examines the effects of such measures on avoidance and crime. It distinguishes between two general policy tools: ex ante regulation (e.g., Pigouvian taxes) and ex post punishment of avoidance. The main results of this paper are that (1) ex ante regulation, if feasible, reduces the incentives to engage in avoidance and consequently in crime; whereas (2) ex post punishment of avoidance may induce more avoidance and more crime. The intuitive reason for the latter result is twofold: ex post punishment of avoidance increases not only the costs but also the benefits of avoidance; and avoidance and crime are generally complements. As the control of avoidance through regulation or punishment can be designed into the legal system, the results of this paper can guide policymaking. They suggest, for example, that recent trends to stiffen penalties for substantially obstructive acts might be counter productive, while imposing liability for avoidance efforts on third, economically-related parties such as lawyers and accountants may be productive in curtailing avoidance, since it acts as an ex ante regulation for the principal offender.
Original languageEnglish
Pages (from-to)1-19
Number of pages19
JournalReview of Law and Economics
Issue number1
StatePublished - 1 Apr 2008


  • Delegated legislation
  • Legal liability
  • Punishment (Psychology)
  • Criminal psychology
  • Crime prevention
  • Incentive (Psychology)


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