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The Enforcement of Imperfect Rules

This paper examines the optimal sanction for rules that are imperfect in that they are either overinclusive, as they prohibit an action that in some circumstances is beneficial, or underinclusive as they allow agents to undertake alternative conducts that are harmful, or both. The paper clarifies why this notion of imperfection divers from the notion of over- and underdeterrence and from that of legal errors. Finally it shows that when rules are imperfect the optimal sanction is lower than the optimal sanction for a perfect rule, both if the rule is overinclusive and if it is underinclusive.


Date: September 2010
Author(s): Paolo Buccirossi
Tag(s): Research Papers , Abuse of Dominance, Cartels, Competition Economics, Cooperation and Vertical Agreements, Litigation, Regulation