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A PRACTICAL EXAMPLE: THE ECONOMICS OF SPEEDING

A PRACTICAL EXAMPLE: THE ECONOMICS OF SPEEDING. Dr. Gomis-Porqueras ECO 680 . Laws and Economics. A legal rule has two consequences: The most immediate is to determine who pays what penalty to whom if the rule is broken.

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A PRACTICAL EXAMPLE: THE ECONOMICS OF SPEEDING

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  1. A PRACTICAL EXAMPLE: THE ECONOMICS OF SPEEDING Dr. Gomis-Porqueras ECO 680

  2. Laws and Economics • A legal rule has two consequences: • The most immediate is to determine who pays what penalty to whom if the rule is broken. • Thus, one might describe a law against speeding as a rule providing that anyone caught driving more than fifty-five miles an hour on the Expressway must pay fifty dollars to the city of Miami. • Viewed this way, a speeding law is simply a way of raising revenue and a speeding ticket a rather peculiar sort of tax bill.

  3. Laws and Incentives • The purpose of speeding laws is not to tax speeding, but to prevent it. We pass such laws because we believe that a driver is less likely to drive fast if one probable consequence of doing so is a fine. • Costs: • Benefits:

  4. Target • Whom? • Why? • Alternative speeding Laws. What do you all propose?

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