ABSTRACT
Papers by Chu and Jiang, Levitt and Dittmann have advanced independent models, which can explain the existence of imprisonment even if the offender could be fined instead. This chapter compares three approaches and assesses to what extent current economic theory can explain the continued reliance upon imprisonment found in practice. It presents the basic modei of punishment and provides a brief review of the most important contributions in the literature. An increase in the expected length of imprisonment can reduce the crime rate either because criminals are deterred by the higher punishment or because more criminals are imprisoned and hence incapable of committing further crimes. An important and straightforward result of the literature on crime and punishment is that fines are more efficient than imprisonment, in the sense that - if the same deterrent effect can be achieved by a fine and by a prison term - it is preferable to use the fine.
