Transnational crimes: how nations should cooperate and why they don't

Chain‐form crime partnerships and intelligence sharing by national authorities to detect cross‐border partners create multiple externalities in the combat against transnational crimes and illicit trafficking. Cooperative enforcements that minimize global harms prioritize the country with lower intelligence production and/or superior detection capability. In equilibrium, as in practice, national enforcements are underbudgeted and might prioritize the wrong side – predominantly the high‐budget, high‐harm country. Governments might not share intelligence out of fear of importing enforcement burden, and harmonizing criminal sanctions alone might not be effective. Shocks on crime deterrence in a target country are first absorbed by source countries, implying weaker horizontal crime transfer effects than projected.