Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/106905
Authors: 
Lang, Matthias
Year of Publication: 
2014
Series/Report no.: 
Preprints of the Max Planck Institute for Research on Collective Goods 2014/17
Abstract: 
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.
Subjects: 
regulation
asymmetric information
deterrence
enforcement
legal uncertainty
rules of reason
JEL: 
K2
D8
K4
L5
Document Type: 
Working Paper

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