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On the deterrent effect of individual versus collective liability in criminal organizations

  • Laetitia Hauret
  • Eric Langlais



  • Cartine Sonntag

    (ICN Business School)

Our paper addresses the question of the deterrent effect of a monetary sanction associated to a collective rather than an individual liability, when crimes are realized within a hierarchical gang (defined as a criminal organization where the leader is a sleeping partner, and several agents are active partners in the illegal or criminal activity). We develop a model where the active gang members face contradictory incentives to commit a crime. On the one hand, public authorities try to deter each gang member by imposing sanctions; on the second, the leader of the gang try to keep his members enough active in the gang by threatening them of private sanctions. We show that sanctions based on individual liability are inefficient to deter gang’s members since the leader overreacts on the public sanctions. In contrast, we show that a regime of collective liability, allowing the judge to sanction the sleeping partner even if he hasn’t realized any crime himself, can reach enough deterrence of the members of the gang.

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Paper provided by CEREFIGE (Centre Europeen de Recherche en Economie Financiere et Gestion des Entreprises), Universite de Lorraine in its series Cahiers du CEREFIGE with number 0903.

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Length: 21 pages
Date of creation: 2009
Date of revision: 2009
Handle: RePEc:fie:wpaper:0903
Contact details of provider: Postal: Pôle Lorrain de Gestion, 13 rue Michel Ney, 54 000 Nancy
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  1. Nuno Garoupa, 1997. "The economics of organized crime and optimal law enforcement," Economics Working Papers 246, Department of Economics and Business, Universitat Pompeu Fabra, revised Dec 1997.
  2. Shavell, Steven, 1997. "The optimal level of corporate liability given the limited ability of corporations to penalize their employees," International Review of Law and Economics, Elsevier, vol. 17(2), pages 203-213, June.
  3. Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
  4. Edward E. Glaeser & Bruce Sacerdote & Jose A. Scheinkman, 1995. "Crime and Social Interactions," Harvard Institute of Economic Research Working Papers 1738, Harvard - Institute of Economic Research.
  5. Nuno Garoupa, 1999. "Optimal law enforcement and criminal organization," Economics Working Papers 366, Department of Economics and Business, Universitat Pompeu Fabra.
  6. A. Mitchell Polinsky & Steven Shavell, 1999. "The Economic Theory of Public Enforcement of Law," NBER Working Papers 6993, National Bureau of Economic Research, Inc.
  7. Privileggi, Fabio & Marchese, Carla & Cassone, Alberto, 2001. "Agent's liability versus principal's liability when attitudes toward risk differ," International Review of Law and Economics, Elsevier, vol. 21(2), pages 181-195, June.
  8. Sylvaine PORET, 2005. "Structure verticale d’un réseau de distribution de drogues illicites et politique répressive optimale," Discussion Papers (REL - Recherches Economiques de Louvain) 2005043, Université catholique de Louvain, Institut de Recherches Economiques et Sociales (IRES).
  9. Gary S. Becker, 1968. "Crime and Punishment: An Economic Approach," Journal of Political Economy, University of Chicago Press, vol. 76, pages 169.
  10. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
  11. Anne C. Case & Lawrence F. Katz, 1991. "The Company You Keep: The Effects of Family and Neighborhood on Disadvantaged Youths," NBER Working Papers 3705, National Bureau of Economic Research, Inc.
  12. Sah, Raaj K, 1991. "Social Osmosis and Patterns of Crime," Journal of Political Economy, University of Chicago Press, vol. 99(6), pages 1272-95, December.
  13. Abdalla Mansour & Nicolas Marceau & Steeve Mongrain, 2001. "Gangs and Crime Deterrence," Cahiers de recherche CREFE / CREFE Working Papers 138, CREFE, Université du Québec à Montréal.
  14. Patacchini, Eleonora & Zenou, Yves, 2005. "Crime and Conformism," CEPR Discussion Papers 5331, C.E.P.R. Discussion Papers.
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