Alex Raskolnikov (Columbia) presents Rethinking Graduated Penalties today at Bar Ilan University, Faculty of Law. Here is the abstract:

Should greater violations be subject to greater penalties, that is, should sanctions be graduated? This Article begins by highlighting the numerous ambiguities embedded in this question. By identifying several axes of graduation and constructing a framework for analyzing graduated sanctions, the Article sets the table for a more careful examination of one type of graduation—that based on aggressiveness, that is, the extent to which behavior deviates from the line separating legal and illegal conduct. While the Article offers several reasons why penalties for many familiar offenses should increase based on aggressiveness, its main argument is against aggressiveness-based graduation for a particular category of acts. The economic analysis of theft, the Article explains, applies to price fixing and bid rigging, insider trading and market manipulation, as well as certain forms of tax avoidance and evasion, to name just some of the ways of misappropriating other people’s money. Because these theft-like offenses are always welfare reducing, the well-known reason for government regulation (internalization of negative externalities) does not apply to them, and neither does the familiar overdeterrence concern about penalizing acts with marginal benefits in excess of marginal costs. After explaining why a fixed statutory penalty for theft-like offenses is more likely to produce optimal deterrence than a schedule of graduated sanctions, the Article evaluates the implications of its findings for several existing regulatory regimes. The regulation of larceny, embezzlement, and many other forms of theft, the Article concludes, is entirely consistent with the proposed framework. The antitrust doctrine and sanctions are largely consistent with it. The securities law reflects a deep confusion about the fundamental distinction between theft-like and other offenses. And while the tax law directly contradicts this Article’s prescriptions, this law is so different from the optimal tax that this Article’s welfarist approach has little to offer to the study of the actual tax rules and penalties.