How Liable Should a Lender Be? The Case of Judgment-Proof Firms and Environmental Risk: Reply

Corporate crime

“…Accounting for the agent's surplus, Shavell (1997) shows that the optimal sanction may not equal the harm. Other papers have found that the optimal sanction should be less than harm in other settings and for other reasons, including Chu and Qian (1995) (in which a reduced sanction encourages the enterprise to hire a monitor that will report credibly on the agent's negligence) and Pitchford (1995) (in which a reduced sanction feeds back through reduced debt repayments to increase the fi rm's residual profi t claim and ultimately its precaution level).…”

“…Judgment proofness eff ectively puts a ceiling on the sanction the state can levy on the party. See Shavell (1986), Pitchford (1995), and MacMinn (2002) for further discussion of the judgment-proof problem in a general context and White (1998) in the context of corporate crime.…”

Strict Liability, Capped Strict Liability, and Care Effort under Asymmetric Information

“…Compared to models that deals with liability and competition, as (PITCHFORD[1995]), (BOYER ANDLAFFONT [1997]), (BOYD AND INGBERMAN [1997]), (HIRIART AND MARTIMORT[2006b]), the level of safety effort is dissociated from the efficiency about the skill of the firm in its management of safety. This could correspond for instance to the relationships between a facility (energy as a nuclear plant), and the government.…”

The Public Management of Risk: Separating Ex Ante and Ex Post Monitors

“…Moreover, on top of institutional restrictions, risky ventures often enter into various activities ("flight-by-night" techniques, spin-offs of subsidiaries, ...) whose goal is to hide seizable assets. Pitchford (2001) and Hiriart and Martimort (2006) analyze the issue of extended liability when ex post legal intervention unveils new funds to compensate victims.…”