Legal Liability of Municipal Corporations: A Rational Choice Approach to Optimising Deterrence

Since corporations owned by municipalities provide important services to local populations, unlawful conduct on their part is especially undesirable. This paper researches the elements that need to be present in a legal framework, so that the deterrent effect regarding undesirable conduct of municipal corporations will be optimised. An approach based on rational choice considerations is proposed, which takes into account the necessity of an adequate severity of sanctions, a high likelihood of liability for offenders and the need to deprive them of unlawful gains. Interrelation and cumulative effects of norms pertaining to criminal, civil and disciplinary liability are emphasized. The proposed model has the potential to be used by policy-makers to gain additional insight into merits or demerits of different potential legal regimes aimed at deterrence of unlawful behaviour in municipal corporations and their employees.