In most jurisdictions, antitrust fines are based on affected commerce rather than on collusive profits, and in some others, caps on fines are introduced based on total firm sales rather than on affected commerce. We uncover a number of distortions that these policies generate, propose simple...

Disputes over penalties for breach of contract are often solved in court. A simple model shows how inefficient courts may induce public buyers to refrain from enforcing penalties for late delivery to avoid litigation, inducing sellers to delay. Using a large dataset on Italian public...

Harassment bribes - payments people give in order not to be denied what they are legally entitled to - are common in for example India. Kaushik Basu recently made a 'radical' proposal to reduce its occurrence: Legalize the act of giving the bribe and double the fine for accepting the bribe! We...