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 qualified violent people for crime, warfare and private protection. In this 'market for extortion' the entry of new violent entrepreneurs enhances the profitability of them all. The supply of violence creates its own demand; an externality of violence that is detrimental to the development in poor countries.
Download Info
To download:
If you experience problems downloading a file, check if you have the
proper application to
view it first. Information about this may be contained
in the File-Format links below. In case of further problems read
the IDEAS help
file. Note that these files are not on the IDEAS
site. Please be patient as the files may be large.
Mehlum, Halvor & Moene, Karl-Ove & Torvik, Ragnar, 2003.
"Plunder & Protections Inc,"
Memorandum
10/2002, Oslo University, Department of Economics.
[Downloadable!]
Find related papers by JEL classification: O - Economic Development, Technological Change, and Growth P - Economic Systems
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.:
Skaperdas, S., 2000.
"Warlord Competition,"
Papers
00-01-20, California Irvine - School of Social Sciences.
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.)
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!]
Other versions: