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Volkswagen could face an $18 billion fine, but are fines effective?




SAN RAFAEL, CA - MARCH 28:  A logo is displayed on the front grill of a brand new Volkswagen car at a Volkswagen dealership on March 28, 2011 in San Rafael, California.  (Photo by Justin Sullivan/Getty Images)
SAN RAFAEL, CA - MARCH 28: A logo is displayed on the front grill of a brand new Volkswagen car at a Volkswagen dealership on March 28, 2011 in San Rafael, California. (Photo by Justin Sullivan/Getty Images)
Justin Sullivan/Getty Images

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Volkswagen on Tuesday admitted to rigging emissions test for its diesel powered cars. The German automaker said the emissions issue affects 11 million vehicles worldwide, and will take more than $7 billion to fix, making it one of the most expensive automotive scandals ever. 

Even though Volkswagen is worth billions of dollars, the company faces a potential fine of $18 billion. It would drain all its profits from 2014, and then some.

But do fines make for an effective disciplinary strategy? Some research shows that fines, whether given to individuals or companies, might not always be a compelling reason to do the right thing.

Joining Take Two to discuss:

To listen to the full interview, click on the blue audio player above