Road Traffic and Efficient Fines
- Cite this article as:
- Goerke, L. European Journal of Law and Economics (2003) 15: 65. doi:10.1023/A:1021101908116
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Road traffic is a typical example of an occupation with bilateral care and activity choices. In such a setting, common liability rules which simply divide damages cannot induce efficient outcomes. It is shown that fines for the violation of traffic regulations which depend on the occurrence of an accident can induce optimal behaviour. The properties of such efficient fines are derived. In particular, efficient fines tend to increase more than proportionally with the severity of an offence, while fines for repeat offenders can rise at a decreasing rate with the number of violations. To evaluate the scope for efficiency-enhancing reforms of fine systems, it is investigated whether actual regulations particularly for speeding conform to the non-proportionality requirement in selected European countries.