ABSTRACT
This chapter explores how the law should calibrate criminal sanctions to effect an efficient price schedule. The ideal price depends on whether one seeks to eliminate or to reduce the crime in question. The positive wing of law and economics is an analytic framework that one can use as a tool to advance a chosen policy. The chapter explains the trade-off between the magnitude and probability of criminal punishment in imparting incentives at a given social cost. It explores the economic merits of such alternative sanctions as imprisonment, fines, shaming devices, and corporal punishment. All of these issues pertain to the question how best to calibrate criminal penalties to suppress output to the desired level. The chapter describes the distinct question how optimally to eliminate categorically undesirable offences. A principal insight is that, due to the social expense of operating the criminal-justice system, the economic challenge is to minimise the joint cost of unjustifiable crime and criminal law enforcement.
