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Plunder & Protection Inc

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Author Info
Halvor Mehlum (University of Oslo)
Karl Moene (University of Oslo)
Ragnar Torvik (NTNU, Trondheim)

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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 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.

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File URL: http://129.3.20.41/eps/dev/papers/0210/0210002.pdf
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Publisher Info
Paper provided by EconWPA in its series Development and Comp Systems with number 0210002.

Download reference. The following formats are available: HTML, plain text, BibTeX, RIS (EndNote), ReDIF
Length: 16 pages
Date of creation: 08 Oct 2002
Date of revision:
Handle: RePEc:wpa:wuwpdc:0210002

Note: Type of Document - pdf; prepared on latex; pages: 16
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Web page: http://129.3.20.41

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Related research
Keywords: crime protection extortion

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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.:

  1. Skaperdas, S., 2000. "Warlord Competition," Papers 00-01-20, California Irvine - School of Social Sciences.
  2. Mehlum,H. & Moene,K. & Torvik,R., 2000. "Predator or prey? : parasitic enterprises in economic development," Memorandum 27/2000, Oslo University, Department of Economics. [Downloadable!]
    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!]
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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. 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:
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