Casual Police Corruption and the Economics of Crime: Further Results

Abstract

This article revisits the Bowles-Garoupa model with regard to corruption and crime. We interpret additional costs inflicted on a caught corrupt fficer as psychological costs, and we incorporate social norms into these psychological costs. In he Bowles-Garoupa model, the deterrent effect of raising fines on crime is weakened but is not perverse in the presence of corruption. Here, due to the `snowballing` character of social norms, raising fines could be counterproductive in deterring crimes if the status quo corruption is widespread. As a corollary, the optimality of the maximal fine suggested by Becker need not be true even if corruption is harmless.