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Organized crime, corruption and punishment

Author

Listed:
  • Maurice Kugler

    (Departement of Economics - University of Southampton)

  • Thierry Verdier

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

  • Yves Zenou

    (Departement of Economics - University of 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
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    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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