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Plunder & Protections Inc

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Author Info

  • Mehlum, Halvor

    ()
    (Dept. of Economics, University of Oslo)

  • Moene, Karl-Ove

    ()
    (Dept. of Economics, University of Oslo)

  • Torvik, Ragnar

    ()
    (Department of Economics, Norwegian University of Science and Technology)

Abstract

When the state fails to supply basic security and protection of property, violent entrepreneurs not only seize the opportunity of plundering, but some also enter the protection business and provide protection against plunderers. This uncoordinated division of labor is advantageous for the entire group of violent entrepreneurs. Hence, in weak states a situation may arise where a large number of violent entrepreneurs can operate side by side as plunderers and protectors squeezing the producers from both sides. The problem reached new levels at the end of the cold war. As military forces were demobilized without civilian jobs to go to, many countries got an oversupply of qualiÞed violent people for crime, warfare and private protection. In this .market for extortion. the entry of new violent entrepreneurs enhances the proÞtability of them all. The supply of violence creates its own demand; an externality of violence that is detrimental to the development in poor countries.

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File URL: http://www.sv.uio.no/econ/english/research/unpublished-works/working-papers/pdf-files/2002/Memo-10-2002.pdf
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Bibliographic Info

Paper provided by Oslo University, Department of Economics in its series Memorandum with number 10/2002.

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Length: 18 pages
Date of creation: 16 Jun 2003
Date of revision:
Handle: RePEc:hhs:osloec:2002_010

Contact details of provider:
Postal: Department of Economics, University of Oslo, P.O Box 1095 Blindern, N-0317 Oslo, Norway
Phone: 22 85 51 27
Fax: 22 85 50 35
Email:
Web page: http://www.oekonomi.uio.no/indexe.html
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Keywords: entrepreneurs; plundering; extortion; violence;

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References

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  1. Skaperdas, S., 2000. "Warlord Competition," Papers 00-01-20, California Irvine - School of Social Sciences.
  2. Herschel I. Grossman, 2001. "The Creation of Effective Property Rights," American Economic Review, American Economic Association, vol. 91(2), pages 347-352, May.
  3. Mehlum,H. & Moene,K. & Torvik,R., 2000. "Predator or prey? : parasitic enterprises in economic development," Memorandum 27/2000, Oslo University, Department of Economics.
  4. Paul Collier, 1994. "Demobilization and insecurity: A study in the economics of the transition from war to peace," Journal of International Development, John Wiley & Sons, Ltd., vol. 6(3), pages 343-351, 05.
  5. Azam, Jean-Paul & Bevan, David & Collier, Paul & Dercon, Stefan & Gunning, Jan & Pradhan, Sanjay, 1995. "Some economic consequences of the transition from civil war to peace," Policy Research Working Paper Series 1392, The World Bank.
  6. Lane, Frederic C., 1958. "Economic Consequences of Organized Violence," The Journal of Economic History, Cambridge University Press, vol. 18(04), pages 401-417, December.
  7. Kai A.Konrad & Stergios Skaperdas, 1997. "Backing up Words with Deeds: Information and punishment in organized crime," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 24, pages 51-63.
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Citations

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Cited by:
  1. Milante, Gary, 2007. "A kleptocrat's survival guide : autocratic longevity in the face of civil conflict," Policy Research Working Paper Series 4186, The World Bank.
  2. Halvor Mehlum & Kalle Moene & Ragnar Torvik, 2004. "Parasites," Development and Comp Systems 0406003, EconWPA.
    • Mehlum, Halvor & Moene, Karl O. & Torvik, Ragnar, 2003. "Parasites," Memorandum 16/2003, Oslo University, Department of Economics.
  3. Giacomo De Luca & Jean-Fran�ois Maystadt & Petros G. Sekeris & John Ulimwengu, 2012. "Mineral Resources and Conflicts in DRC: A Case of Ecological Fallacy," Working Papers 1207, University of Namur, Department of Economics.
  4. Halvor Mehlum & Karl Moene & Ragnar Torvik, 2006. "Cursed by Resources or Institutions?," The World Economy, Wiley Blackwell, vol. 29(8), pages 1117-1131, 08.
  5. Murshed, S. Mansoob, 2004. "When Does Natural Resource Abundance Lead to a Resource Curse?," Discussion Papers 24137, International Institute for Environment and Development, Environmental Economics Programme.

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