Legal uncertainty: A selective deterrent

Arbeitspapier

I show that legal uncertainty, i.e., uncertainty about the legality of a specific action, has positive welfare effects. Legal uncertainty works as a screening device provided that the threshold of legality is uncertain. The uncertainty discourages controversial actions, while it encourages socially beneficial actions. Legal uncertainty is a selective deterrent, because the uncertainty changes the probability of being convicted in opposite directions. Hence, in designing optimal rules there is no reason to avoid legal uncertainty at all costs. For example, the positive effect of legal uncertainty influences the balance between per-se rules and rules of reason in competition law.

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• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Preprints of the Max Planck Institute for Research on Collective Goods ; No. 2014/17

Classification and Topics

• Classification: Wirtschaft
• Subject: regulation ; asymmetric information ; deterrence ; enforcement ; legal uncertainty ; rules of reason

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Lang, Matthias
• Event: Veröffentlichung
• (who): Max Planck Institute for Research on Collective Goods
• (where): Bonn
• (when): 2014

Further information

• Handle: http://hdl.handle.net/10419/106905