Optimal fines in libraries and documentation centers

Abstract

In this paper we try to determine the optimal level of the fines imposed on library users. These fines are levied to deter people from keeping books too long or even damage or steal them. The fines should be high enough to prevent abuses but not excessively high. Our model will be based on the work of Polinsky and Shavell on optimal fines for polluters. It will be proved that the optimal fine should depend on the level of harm done, the probability of detection and the variable enforcement cost. We will illustrate this with an example.