Abstract
Administrative fines are an increasingly common regulatory tool. In many jurisdictions, they can be issued both to private corporations and public entities. However, corporations and public entities face different incentives: A fine on a corporation leads to a transfer from the shareholders, whereas the public ultimately pays for a fine on a public entity. In theory, the effects of fines are stronger on private firms than on public entities, as shareholders have more substantial incentives for monitoring behavior than voters, unless the fines are so high that they displace specific public spending, cared for by the voters.