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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)

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://128.118.178.162/eps/dev/papers/0210/0210002.pdf
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Bibliographic Info

Paper provided by EconWPA in its series Development and Comp Systems with number 0210002.

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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://128.118.178.162

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Keywords: crime; protection; extortion;

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References

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  1. 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.
  2. Herschel I. Grossman, 2001. "The Creation of Effective Property Rights," American Economic Review, American Economic Association, American Economic Association, vol. 91(2), pages 347-352, May.
  3. Skaperdas, S., 2000. "Warlord Competition," Papers, California Irvine - School of Social Sciences 00-01-20, California Irvine - School of Social Sciences.
  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., John Wiley & Sons, Ltd., vol. 6(3), pages 343-351, 05.
  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, Nordic Journal of Political Economy, vol. 24, pages 51-63.
  6. Mehlum, Halvor & Moene, Karl & Torvik, Ragnar, 2003. "Predator or prey?: Parasitic enterprises in economic development," European Economic Review, Elsevier, Elsevier, vol. 47(2), pages 275-294, April.
  7. Lane, Frederic C., 1958. "Economic Consequences of Organized Violence," The Journal of Economic History, Cambridge University Press, Cambridge University Press, vol. 18(04), pages 401-417, December.
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Cited by:
  1. Murshed, S. Mansoob, 2004. "When Does Natural Resource Abundance Lead to a Resource Curse?," Discussion Papers, International Institute for Environment and Development, Environmental Economics Programme 24137, International Institute for Environment and Development, Environmental Economics Programme.
  2. Halvor Mehlum & Karl Ove Moene & Ragnar Torvik, 2005. "Cursed by resources or institutions?," Working Paper Series, Department of Economics, Norwegian University of Science and Technology 5705, Department of Economics, Norwegian University of Science and Technology.
  3. Mehlum, Halvor & Moene, Karl O. & Torvik, Ragnar, 2003. "Parasites," Memorandum, Oslo University, Department of Economics 16/2003, Oslo University, Department of Economics.
  4. 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.
  5. Giacomo De Luca & Jean-Fran´┐Żois Maystadt & Petros G. Sekeris & John Ulimwengu, 2012. "Mineral Resources and Conflicts in DRC: A Case of Ecological Fallacy," Working Papers, University of Namur, Department of Economics 1207, University of Namur, Department of Economics.

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