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Organized crime, corruption and punishment

Author

Listed:
  • Maurice Kugler

    (Departement of Economics - University of Southampton [Southampton])

  • Thierry Verdier

    (CEPR - Center for Economic Policy Research - CEPR, DELTA - Département et Laboratoire d'Economie Théorique et Appliquée - ENS Paris - École normale supérieure - Paris - EHESS - École des hautes études en sciences sociales - CNRS - Centre National de la Recherche Scientifique)

  • Yves Zenou

    (Departement of Economics - University of Southampton [Southampton], The Research Institute of Industrial Economics - The Research Institute of Industrial Economics, GAINS - Groupe d'Analyse des Itinéraires et des Niveaux Salariaux - UM - Le Mans Université)

Abstract

We analyze an oligopoly model in which differentiated criminal organizations globally compete on criminal activities and engage in local corruption to avoid punishment. When bribing costs are low, that is badly-paid and dishonest law enforcers work in a weak governance environment, and the rents from criminal activity are sufficiently high, we find that increasing policing and sanctions can generate higher crime rates. Indeed, beyond a threshold, further increases in intended expected punishment create incentives for organized crime to extend corruption rings, and ensuing impunity results in a fall of actual expected punishment that yields more rather than less crime.

Suggested Citation

  • Maurice Kugler & Thierry Verdier & Yves Zenou, 2005. "Organized crime, corruption and punishment," Post-Print halshs-00754068, HAL.
  • Handle: RePEc:hal:journl:halshs-00754068 DOI: 10.1016/j.jpubeco.2004.05.005, Note: View the original document on HAL open archive server: https://hal-pjse.archives-ouvertes.fr/halshs-00754068
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    References listed on IDEAS

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    1. repec:spr:etbull:v:5:y:2017:i:2:d:10.1007_s40505-017-0116-5 is not listed on IDEAS
    2. Nicolas Melissas, 2009. "Corruption, Extortion, and the Boundaries of the Law," Journal of Law, Economics, and Organization, Oxford University Press, vol. 25(2), pages 442-471, October.
    3. Paolo Buonanno & Daniel Montolio & Paolo Vanin, 2009. "Does Social Capital Reduce Crime?," Journal of Law and Economics, University of Chicago Press, vol. 52(1), pages 145-170, February.
    4. Millán-Quijano, Jaime, 2015. "Internal cocaine trafficking and armed violence in Colombia," UC3M Working papers. Economics we1508, Universidad Carlos III de Madrid. Departamento de Economía.
    5. Stéphane Straub, 2009. "Regulatory Intervention, Corruption and Competition," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 35(1), pages 123-148, September.
    6. repec:kap:annfin:v:13:y:2017:i:3:d:10.1007_s10436-017-0299-7 is not listed on IDEAS
    7. Katariina Nilsson Hakkala & Pehr-Johan Norbäck & Helena Svaleryd, 2008. "Asymmetric Effects of Corruption on FDI: Evidence from Swedish Multinational Firms," The Review of Economics and Statistics, MIT Press, vol. 90(4), pages 627-642, November.
    8. Raul Caruso & Adelaide Baronchelli, 2013. "Economic aspects of the complementarity between corruption and crime: evidence from Italy in the period 1996-2005," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 6(2/3), pages 244-260.
    9. Flores, Daniel, 2016. "Violence and law enforcement in markets for illegal goods," International Review of Law and Economics, Elsevier, vol. 48(C), pages 77-87.
    10. Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2005. "Organized crime, corruption and punishment," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1639-1663, September.
    11. Millán-Quijano, Jaime, 2015. "Drugs, guns and early motherhood in Colombia," UC3M Working papers. Economics we1509, Universidad Carlos III de Madrid. Departamento de Economía.
    12. Ishita Chatterjee & Ranjan Ray, 2013. "The Role of Institutions in the Incidence of Crime and Corruption," Economics Discussion / Working Papers 13-17, The University of Western Australia, Department of Economics.
    13. Antony W. Dnes & Nuno Garoupa, 2010. "Behavior, Human Capital and the Formation of Gangs," Kyklos, Wiley Blackwell, vol. 63(4), pages 517-529, November.
    14. Kugler, Maurice & Verdier, Thierry & Zenou, Yves, 2004. "Organised crime, corruption and punishment," Discussion Paper Series In Economics And Econometrics 0407, Economics Division, School of Social Sciences, University of Southampton.
    15. Celik, Gorkem & Sayan, Serdar, 2005. "To Give In or Not To Give In To Bribery? Setting the Optimal Fines for Violations of Rules when the Enforcers are Likely to Ask for Bribes," Microeconomics.ca working papers celik-05-08-03-12-50-26, Vancouver School of Economics, revised 06 Aug 2008.
    16. Pedro H. Albuquerque, 2005. "Shared Legacies, Disparate Outcomes: Why American South Border Cities Turned the Tables on Crime and Their Mexican Sisters Did Not," Law and Economics 0511002, EconWPA.
    17. Ethan Bueno De Mesquita & Catherine Hafer, 2008. "Public Protection Or Private Extortion?," Economics and Politics, Wiley Blackwell, vol. 20(1), pages 1-32, March.
    18. Long, Iain W., 2013. "Recruitment to Organised Crime," Cardiff Economics Working Papers E2013/10, Cardiff University, Cardiff Business School, Economics Section.
    19. Aquilante, Tommaso & Maretto, Guido, 2016. "Cooperation in Criminal Markets," MPRA Paper 75949, University Library of Munich, Germany.
    20. Berno Buechel & Gerd Muehlheusser, 2016. "Black Sheep or Scapegoats? Implementable Monitoring Policies under Unobservable Levels of Misbehavior," The Journal of Legal Studies, University of Chicago Press, vol. 45(2), pages 331-366.
    21. Ilaria Petrarca & Roberto Ricciuti, 2013. "The Historical Roots of Corruption and Economic Development in Italy," CESifo Working Paper Series 4212, CESifo Group Munich.
    22. DeAngelo, Gregory, 2012. "Making space for crime: A spatial analysis of criminal competition," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 42-51.
    23. repec:eee:jeborg:v:141:y:2017:i:c:p:43-63 is not listed on IDEAS

    More about this item

    Keywords

    Deterrence; Organized crime; Corruption; Oligopoly; Free entry;

    JEL classification:

    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets

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