Optimal law enforcement with legal aid

The economic literature on enforcement is generally pessimistic concerning the use of legal aid. In this paper we show that legal aid can be a part of optimal law enforcement. The rationale behind our result is that with legal aid, in a system with legal or judicial error both guilty and innocent individuals are better off, because the marginal cost of defence expenditure is reduced. If, on average, legal aid helps the innocent more than the guilty, a government seeking to maximize social welfare will want to use it in order to increase deterrence.