The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd

Deterrence (Theory), Economics of

  • Isaac Ehrlich
Reference work entry


In both its classical and modern versions the economic theory of crime is predicated on ‘the deterrence hypothesis’ – the assumption that potential and actual offenders respond to both positive and negative incentives, and that the volume of offences in the population is influenced by law enforcement and other means of crime prevention. This article traces the evolution of the modern approach to crime from the traditional focus on the interaction between offenders and law enforcers to the development of a more comprehensive ‘market model’ under both partial and general equilibrium settings. Theoretical extensions also emphasize alternative criteria for optimal law enforcement.


Beccaria, C. Becker, G. Bentham, J. Bribery Deterrence Deterrence hypothesis Ehrlich, I. Expected utility hypothesis Pecuniary vs. non-pecuniary penalties Public choice Public enforcement of law Punishment Rent seeking 

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© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Isaac Ehrlich
    • 1
  1. 1.