In this paper, we focus on the determination of the optimal fine set by a regulator when a firm can litigate to avoid paying the fine and the monitoring agency has discretionary power to negotiate with the firm the size of the fine. The regulator needs to balance the positive effect of the fines...

1. Prologue: The Paradox of Punishment -- 2. The Social Cost of Crime: Deterrence -- 3. Crime as Exchange: Retribution -- 4. Sentencing Guidelines and Judicial Discretion: Balancing Deterrence and Retribution -- 5. Plea Bargaining: Negotiated Justice -- 6. Repeat Offenders: Marginal Deterrence...