The Economics of Organized Crime and Optimal Law Enforcement

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The Economics of Organized Crime and Optimal Law Enforcement

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Garoupa, Nuno

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Nuno Garoupa

Abstract

This article extends the optimal law enforcement literature to organized crime. I model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion. As long as extortion is a costless transfer from individuals to the criminal organization, not only the existence of extortion is social welfare improving because it makes engaging in a criminal offense less attractive but it also allows the government to reduce expenditures on law enforcement. When extortion is costly because the criminal organization resorts to threats and violence, the existence of extortion is social welfare diminishing and may lead to higher expenditures on law enforcement. Copyright 2000 by Oxford University Press.

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Article provided by Oxford University Press in its journal Economic Inquiry.

Volume (Year): 38 (2000)
Issue (Month): 2 (April)
Pages: 278-88
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Handle: RePEc:oup:ecinqu:v:38:y:2000:i:2:p:278-88

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Paper
- 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. [Downloadable!]

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

Ehrlich, Isaac, 1996. "Crime, Punishment, and the Market for Offenses," Journal of Economic Perspectives, American Economic Association, vol. 10(1), pages 43-67, Winter. [Downloadable!] (restricted)
Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May. [Downloadable!] (restricted)
Skaperdas, S. & Syropoulos, C., 1993. "Gangs as Primitive States," Papers 92-93-13, California Irvine - School of Social Sciences.
Other versions:
- Syropoulos, C. & Skeperdas, S., 1993. "Gangs as Primitive States," Papers 10-93-25, Pennsylvania State - Department of Economics.
- Skaperdas, S. & Syropoulos, C., 1993. "Gangs as Primitive States," Papers 92-93-02, California Irvine - School of Social Sciences.
Bebchuk, Lucian Arye & Kaplow, Louis, 1993. "Optimal sanctions and differences in individuals' likelihood of avoiding detection," International Review of Law and Economics, Elsevier, vol. 13(2), pages 217-224, June. [Downloadable!] (restricted)
Polinsky, A Mitchell & Shavell, Steven, 1992. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," Journal of Law & Economics, University of Chicago Press, vol. 35(1), pages 133-48, April.
Other versions:
- A. Mitchell Polinsky & Steven Shavell, 1993. "Enforcement Costs and the Optimal Magnitude and Probability of Fines," NBER Working Papers 3429, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
A. Mitchell Polinsky & Steven Shavell, 1991. "A Note on Optimal Fines When Wealth Varies Among Individuals," NBER Working Papers 3232, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
Other versions:
- Polinsky, A Mitchell & Shavell, Steven, 1991. "A Note on Optimal Fines When Wealth Varies among Individuals," American Economic Review, American Economic Association, vol. 81(3), pages 618-21, June. [Downloadable!] (restricted)
Polinsky, Mitchell & Shavell, Steven, 1979. "The Optimal Tradeoff between the Probability and Magnitude of Fines," American Economic Review, American Economic Association, vol. 69(5), pages 880-91, December. [Downloadable!] (restricted)
Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Blackwell Publishing, vol. 11(3), pages 267-95, September. [Downloadable!] (restricted)
Shavell, Steven, 1987. "A Model of Optimal Incapacitation," American Economic Review, American Economic Association, vol. 77(2), pages 107-10, May.
Bowles, Roger & Garoupa, Nuno, 1997. "Casual police corruption and the economics of crime," International Review of Law and Economics, Elsevier, vol. 17(1), pages 75-87, March. [Downloadable!] (restricted)
Grossman, Herschel I, 1991. "A General Equilibrium Model of Insurrections," American Economic Review, American Economic Association, vol. 81(4), pages 912-21, September. [Downloadable!] (restricted)

Full references

Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

Langlais, Eric, 2008. "Deterrence of a criminal team: how to rely on its members' shortcomings?," MPRA Paper 14369, University Library of Munich, Germany. [Downloadable!]
Other versions:
- Eric Langlais, 2009. "Deterrence of a criminal team: how to rely on its members’shortcomings ?," EconomiX Working Papers 2009-11, University of Paris West - Nanterre la Défense, EconomiX. [Downloadable!]
- Eric LANGLAIS, 2009. "Deterrence Of A Criminal Team: How To Rely On Its Members' Short Comings ?," Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. 4(1(7)_ Spr). [Downloadable!]
Maurice Kugler & Thierry Verdier & Yves Zenou, 2003. "Organized Crime, Corruption and Punishment," DELTA Working Papers 2003-34, DELTA (Ecole normale supérieure). [Downloadable!]
Other versions:
- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2004. "Organised Crime, Corruption and Punishment," Discussion Paper Series In Economics And Econometrics 0407, Economics Division, School of Social Sciences, University of Southampton. [Downloadable!]
- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2003. "Organized Crime, Corruption and Punishment," Working Paper Series 600, Research Institute of Industrial Economics. [Downloadable!]
- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2003. "Organized Crime, Corruption and Punishment," CEPR Discussion Papers 3806, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005. "Organized crime, corruption and punishment," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1639-1663, September. [Downloadable!] (restricted)
Alfredo Burlando & Alberto Motta, 2007. "Self Reporting reduces corruption in law enforcement," "Marco Fanno" Working Papers 0063, Dipartimento di Scienze Economiche "Marco Fanno". [Downloadable!]
Other versions:
- Motta, Alberto & Burlando, Alfredo, 2007. "Self reporting reduces corruption in law enforcement," MPRA Paper 5332, University Library of Munich, Germany, revised 19 Jan 2008. [Downloadable!]
Giancarlo Spagnolo, 2004. "Divide et Impera. Optimnal Deterrence Mechanisms Against Cartels and Organized Crime," Econometric Society 2004 North American Winter Meetings 485, Econometric Society. [Downloadable!]
Hauret, Laetitia & Langlais, Eric & Sonntag, Carine, 2009. "On the deterrent effect of individual versus collective liability in criminal organizations," MPRA Paper 14762, University Library of Munich, Germany. [Downloadable!]
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. [Downloadable!]
Other versions:
- Abdala Mansour & Nicolas Marceau & Steeve Mongrain, 2006. "Gangs and Crime Deterrence," Journal of Law, Economics and Organization, Oxford University Press, vol. 22(2), pages 315-339, October. [Downloadable!] (restricted)

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