The Limit of Law: Factors Influencing the Decision to Make Harmful Acts Illegal

Abstract

This paper examines factors affecting the decision of whether or not to make certain harmful acts illegal. It considers factors related both to the cost of law enforcement and to the crime commission decision. On the enforcement side, illegality is limited by the existence of fixed notice and response costs, which are unrelated to the harm from the act, and also by costs of imposing punishment. In addition, illegality is limited by a finite marginal productivity of detection, one cause of which is legal error. On the commission side, illegality is limited if all offenders have strictly positive benefits from committing the act. The paper concludes by examining how the optimal scope of law is affected by its expressive function, the idea that some people are deterred by the mere fact that an act is illegal. We specifically ask how the scope of law changes if more people behave in this way. The answer depends on whether efficient violations of the law are possible, which in turn depends on whether offenders' gains are counted in welfare.