The Economics of Organized Crime and Optimal Law Enforcement
AbstractThis 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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Bibliographic InfoArticle provided by Western Economic Association International in its journal Economic Inquiry.
Volume (Year): 38 (2000)
Issue (Month): 2 (April)
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Other versions of this item:
- 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.
- K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior
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