492 8600 CORPORATE CRIMINAL LIABILITY John R. Lott, Jr John M. Olin Visiting Law and Economics Fellow University of Chicago Law School © Copyright 1999 John R. Lott, Jr Abstract This chapter reviews the economic literature on corporate crime. Economists have discussed and answered a number of questions about corporate crime in only few years time span. Perhaps this unusual success is due to the questions involving corporations being so similar to other crime issues, previously analysed. However, a number of questions remain largely unexplored. Why do certain firms commit crimes while others do not? What are the social costs imposed by the very high corporate criminal penalties? How does the criminal justice process shape the organisation of firms? JEL classification: K22, K14, K42 Keywords: Corporate Crime, Firm, US Sentencing Guidelines 1. Introduction The economic analysis of corporate crime only started gaining momentum during the last half dozen years. Of course, one notable exception to this rule is Posner’s textbook on the Economic Analysis of Law (1992), though the discussion of corporate criminality is relegated to issues such as whether firms should obey the law or maximise profits. (It is also puzzling to report how economists still fail in providing a conclusive definition of a firm. For example, while I am sure that it is not done intentionally, definitions of organised crime appear to be interchangeable with definition of firms (see, for example, Dick, 1995)). The catalyst for this was the debate over and the subsequent adoption in 1991 of the US government’s corporate sentencing guidelines. The research itself has largely focused on theoretical questions raised by the guidelines (for example, what should be included in calculating the social cost of crimes committed by corporations or whether it should be the firm and/or its managers who are penalised), descriptive empirical evidence on how corporate penalties have changed over time, and some evidence indicating what factors predispose firms to violate the law.