Corruption, Extortion, and the Boundaries of the Law
We consider a setup in which a principal must decide whether or not to legalize a socially undesirable activity. The law is enforced by a monitor who may be bribed to conceal evidence of the offense and who may also engage in extortionary practices. The principal may legalize the activity even if it is a very harmful one. The principal may also declare the activity illegal knowing that the monitor will abuse the law to extract bribes out of innocent people. Our model offers a novel rationale for legalizing possession and consumption of drugs while continuing to prosecute drug dealers. (JEL D82, L22, K4) The Author 2008. Published by Oxford University Press on behalf of Yale University. All rights reserved. For permissions, please email: firstname.lastname@example.org, Oxford University Press.
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Volume (Year): 25 (2009)
Issue (Month): 2 (October)
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References listed on IDEAS
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- Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005.
"Organized crime, corruption and punishment,"
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- Ajit Mishra, 1996. "Hierarchies, Incentives And Collusion In A Model Of Enforcement," Working papers 34, Centre for Development Economics, Delhi School of Economics.
- Hindriks, Jean & Keen, Michael & Muthoo, Abhinay, 1999. "Corruption, extortion and evasion," Journal of Public Economics, Elsevier, vol. 74(3), pages 395-430, December.
- HINDRIKS, Jean & KEEN, Michael & MUTHOO, Abhinay, "undated". "Corruption, extortion and evasion," CORE Discussion Papers RP 1671, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Hindriks, J. & Keen, M. & Muthoo, A., 1998. "Corruption, Extortion and Evasion," Discussion Papers 9809, Exeter University, Department of Economics.
- Hindriks, J. & Keen, M. & Muthoo, A., 1996. "Corruption, Extortion and Evasion," Papers 179, Notre-Dame de la Paix, Sciences Economiques et Sociales.
- Kessler, Anke S., 2000. "On Monitoring and Collusion in Hierarchies," Journal of Economic Theory, Elsevier, vol. 91(2), pages 280-291, April.
- Paolo Mauro, 1995. "Corruption and Growth," The Quarterly Journal of Economics, Oxford University Press, vol. 110(3), pages 681-712. Full references (including those not matched with items on IDEAS)
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