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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)

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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.oekonomi.uio.no/memo/memopdf/memo1002.pdf
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Publisher 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

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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
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Web page: http://www.oekonomi.uio.no/indexe.html
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Related research
Keywords: entrepreneurs; plundering; extortion; violence;

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Find related papers by JEL classification:
A10 - General Economics and Teaching - - General Economics - - - General

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.:

  1. Skaperdas, S., 2000. "Warlord Competition," Papers 00-01-20, California Irvine - School of Social Sciences.
    Other versions:
    • Skaperdas, Stergios, 2001. "Warlord Competition," Working Papers UNU-WIDER Research Paper , World Institute for Development Economic Research (UNU-WIDER). [Downloadable!]
  2. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, vol. 47(2), pages 275-294, April. [Downloadable!] (restricted)
    Other versions:
  3. Herschel I. Grossman, 2001. "The Creation of Effective Property Rights," American Economic Review, American Economic Association, vol. 91(2), pages 347-352, May. [Downloadable!] (restricted)
    Other versions:
  4. 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. [Downloadable!]
  5. 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. [Downloadable!]
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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.)

  1. Halvor Mehlum & Kalle Moene & Ragnar Torvik, 2004. "Parasites," Development and Comp Systems 0406003, EconWPA. [Downloadable!]
  2. 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. [Downloadable!]
  3. Halvor Mehlum & Karl Ove Moene & Ragnar Torvik, 2005. "Cursed by resources or institutions?," Working Paper Series 5705, Department of Economics, Norwegian University of Science and Technology. [Downloadable!]
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