Economic Analysis Of Penalty

Since the reform and opening up, because of the acceleration of social change and socialtransformation, China’s crime rate is constantly elevated. Especially into the21st century, thecrime problem has been quite severe. How to prevent and reduce crime has become animportant topic in the new century. Many disciplines such as criminology, criminal law,sociology, politics and philosophy have thoroughly analyzed the problems of crimes, and theachievements they acquired have provided us the theoretical basis in coping with the criminalproblems. However, the Current Situation is not satisfactory. Faced with the high crime rate,the traditional disciplines seem difficult to have a greater contribution.The limitations of theories may be attributed to the weakness of the methodologies.Economics as the Queen of the social sciences and law is one of the world’s oldest disciplines,in the analysis tools and analysis methods, having its own unique set of methodology. Sincethe1960s, due to the intersection of law and economics integration,resulted in an emergingdiscipline-Law and Economics.Since Law and Economics to produce, its analysis related tothe scope of civil law, criminal law, administrative law, economic law, intellectual propertylaw and other legal departments and have great academic influence. In this paper, using theeconomic analysis methods and learning from some of the basic theory of game theory andbehavioral economics analysis the penalty problem, hope to promote scientific penalty.The paper is divided into the following four parts:The first part discusses the necessity of the existence of penalty. First, comparative analysis of criminal acts and violations prove that the civil sanctions can not effectively solvethe crime problem. Penalty has the irreplaceable role of the other sanctions; then, using theempirical data during the "strike hard" prove that the penalty can indeed play a deterrent tocrime effect.The second part respectively using microcosmic economics and game theory methods toprove the existence of an optimal deterrent, exceeded or not reached this point are noteconomical. First of all, as a result of a criminal act generated a net social loss and thedeterrent effect can reduce crime, thereby reducing the net social loss. But the penalty alsoneeds cost. If the penalty cost more than the penalty revenue, it is not efficient. The best resultis the marginal revenue is equal to its marginal cost. Then through the reference of" Hawk anddove game" model proved that the behavior of crime is to a certain proportion of existence.The optimal level of penalty deterrence is to maintain this ratio.The third part discusses the resource allocation optimization problem. When penaltyresources is certain, which can achieve the highest level of penalty deterrent way is the best.Through the analysis, we proved that the tangent point of the penalty cost lines and deterrencecurve is the optimal allocation of resources. And then taking fine and imprisonment forexample, further elaborated the view.The last part takes the other factors which affect the penalty deterrence into account,making the analysis more comprehensive. First of all, using the theory of behavioraleconomics and taking the limited rationality, limited perseverance and risk preference intoconsideration, makes the analysis more complete. Then, points out the penalty deterringshould be restricted by realistic conditions, social values and marginal deterrence. Finally,pointed out the errors of justice will reduce the penalty’s deterrent.