Skip to main content Accessibility help

We use cookies to distinguish you from other users and to provide you with a better experience on our websites. Close this message to accept cookies or find out how to manage your cookie settings.

Close cookie message
×
Hostname: page-component-745bb68f8f-g4j75 Total loading time: 0 Render date: 2025-01-18T14:21:45.817Z Has data issue: false hasContentIssue false

3 - Sanctions on Legal Persons

An Economic Analysis

from Part I - General Chapters

Published online by Cambridge University Press:  29 July 2022

By
Ákos Szalai
Edited by
Tihamer Tóth
Tihamer Tóth
Affiliation:
Pázmány Peter Catholic University (Budapest, Hungary)
Get access

Summary

The chapter examines four economic models, the implications of behavioural economics and the main normative implications of the sanctioning policies. Classical economic analysis of sanctions and crimes presumes that decision-makers are sanctioned directly, personally. Yet this model can only be applied in the case of competition law sanctions levied on the company, if the decision-maker of the firm is at the same time the owner of the company. If companies are sanctioned, the key issue is whether they apply internal sanctions against the decision-maker. Such sanctions can be ex-ante or ex-post, fitted perfectly of imperfectly to the goals of the decision-maker. However, not all companies apply sanctions, some because of agency problems, others because the owners of the company are not able to learn who should be sanctioned and when. There are also cases where the owners are not interested in preventing unlawful decisions even if the company is later sanctioned. The reason for that might be that they do not bear the burden of the sanctions or they make a credible commitment not to levy full (or any) sanctions on managers in order to induce them to take more risks.

Keywords

classical economic theoryrisk seekingrisk aversionefficiency of sanctionsbehavioural economicsbounded rationality
Type
Chapter
Information
The Cambridge Handbook of Competition Law Sanctions , pp. 37 - 53
Publisher: Cambridge University Press
Print publication year: 2022

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Arlen, Jennifer. 1994. The Potentially Perverse Effects of Corporate Criminal Liability, 23 Journal of Legal Studies 833–67.Google Scholar
Arlen, Jennifer. 2012. Corporate Criminal Liability: Theory and Evidence, in Harel, Alon and Hylton, Keith N. (eds.), Research Handbook on the Economics of Criminal Law, Edward Elgar, 144–203.Google Scholar
Arlen, Jennifer, and Kraakman., Reinier 1997. Controlling Corporate Misconduct: An Analysis of Corporate Liability Regimes, New York University Law Review 72, 687–779.Google Scholar
Baumol, William J. 1958. On the Theory of Oligopoly, Economica 25(99), 187–98.Google Scholar
Becker, Gary. 1968. Crime and Punishment: An Economic Approach, Journal of Political Economy 76, 169–217.Google Scholar
Cooter, Robert, and Ulen., Thomas 2012. Law and Economics, 6th ed., Addison-Wesley.Google Scholar
Cullis, John, and Jones., Phillip 2009. Public Economics and Public Choice, 3rd ed., Oxford University Press.Google Scholar
Downs, Anthony. 1957. An Economic Theory of Political Action in a Democracy. Journal of Political Economy 65: 135–50.CrossRefGoogle Scholar
Garoupa, Nuno. 2003. Behavioral Economic Analysis of Crime: A Critical Review. European Journal of Law and Economics 5: 5–15.Google Scholar
Hansmann, Henry, Kraakman, Reinier, and Squire., Richard 2006. Law and the Rise of the Firm, Harvard Law Review 119, 1335–1403.Google Scholar
Harel, Alon. 2012. Economic Analysis of Criminal Law: A Survey, in Harel, Alon and Hylton, Keith N. (eds.), Research Handbook on the Economics of Criminal Law, Edward Elgar, 10–50.Google Scholar
Harel, Alon. 2014. Behavioural Analysis of Criminal Law: A Survey, Bergen Journal of Criminal Law and Criminal Justice 2: 32–55.Google Scholar
Hirshleifer, Jack, Glazer, Amihai, and Hirshleifer., David 2005. Price Theory and Applications: Decisions, Markets, and Information, 7th ed., Cambridge University Press.Google Scholar
Jensen, Michael C. 1986. Agency Costs of Free Cash Flow, Corporate Finance and Takeovers, American Economic Review, Papers and Proceedings 76, 323–29.Google Scholar
Jolls, Chirtine, Sunstein, Cass R., and Thaler., Richard 1998. A Behavioral Approach to Law and Economics, Stanford. Law Review 50, 14711550.Google Scholar
Kahneman, Daniel. 2003. Maps of Bounded Rationality: Psychology for Behavioral Economics, American Economic Review 93, 1449–75.Google Scholar
Kahneman, Daniel, and Tversky., Amos 1979. Prospect Theory: An Analysis of Decision Under Risk, Econometrica 47, 263–91.Google Scholar
McAdams, Richard H., and Ulen., Thomas S. 2009. Behavioral Criminal Law and Economics, in Garoupa, Nuno (ed.), Criminal Law and Economics, Edward Elgar, 403–36.Google Scholar
Milgrom, Paul, and Roberts., John 1992. Economics, Organizations, and Management, Prentice Hall.Google Scholar
Posner, Richard A. 2011. Economic Analysis of Law, 8th ed., Aspen Publications.Google Scholar
Rothschild, Michael, and Stiglitz., Joseph E. 1976. Equilibrium in Competitive Insurance Markets: An Essay on the Economics of Imperfect Information, Quarterly Journal of Economics 90: 626–49.Google Scholar
Shavell, Steven . 2009. Foundations of Economic Analysis of Law, Belknap Press.Google Scholar
Stigler, George J. 1970. The Optimum Enforcement of Laws. Journal of Political Economy 78, 526–36.Google Scholar
Weinstein, Olivier. 2012. Managerial Theories: Baumol and Marris, in Dietrich, Michael and Krafft, Jackie (eds.), Handbook on the Economics and Theory of the Firm, Edward Elgar, ch. 9.Google Scholar

Save book to Kindle

To save this book to your Kindle, first ensure [email protected] is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×