The Economics of Business Crime: Theory and Public Policy Implications

The economics of crime has traditionally been concerned with individual deterrence, from a cost-benefit analysis viewpoint. Generally speaking, firms or corporations rather than individual criminals commit business crimes. Thus, agency theory (that is, the principal-agent framework) seems very appealing, and particularly suitable for generating useful insights into business crime. In this paper we give a brief introduction to the economic theory of business crime and enforcement. We discuss corporate criminal liability, implications for business security, and the political economy of business crime.