Marginal deterrence concerns the incentives created by criminal penalties for offenders to refrain from committing more harmful acts. We show that when offenders act sequentially, it is often optimal for the level of the sanction, not just the expected sanction, to rise with the severity of the...

This paper adapts the standard economic model of crime to incorporate both deterrence and incapacitation. The results show that adding incapacitation can result in either a longer or a shorter optimal prison term compared to the deterrence-only model.

The holdup and holdout problems arise in different contexts, but they share certain fundamental similarities that have not generally been recognized. This paper characterizes the commonalties between the two problems and their remedies.