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On The Economics oF Organized Crime

  • Vimal Kumar

    ()

    (Department of Economics, University of California-Irvine)

  • Stergios Skaperdas

    ()

    (Department of Economics, University of California-Irvine)

The core function of organized crime is the selling of protection. Protection can be real, against third-party crime, or manufactured by the organized crime groups themselves. Mafias and gangs emerge in areas of weak state control, because of prohibition and geographic, ethnic, or social isolation. Although competition is considered good in economics, in the case of organized crime the predatory competition that is more likely to take place is harmful. The costs of organized crime include the resources expended on the activity, more ordinary productive and investment distortions, as well as other dynamic effects on occupational choice.

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File URL: http://www.economics.uci.edu/files/docs/workingpapers/2007-08/skaperdas-15.pdf
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Paper provided by University of California-Irvine, Department of Economics in its series Working Papers with number 070815.

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Length: 17 pages
Date of creation: Feb 2008
Date of revision:
Handle: RePEc:irv:wpaper:070815
Contact details of provider: Postal: Irvine, CA 92697-3125
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Web page: http://www.economics.uci.edu/

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  1. Nuno Garoupa, 1999. "Optimal law enforcement and criminal organization," Economics Working Papers 366, Department of Economics and Business, Universitat Pompeu Fabra.
  2. Syropoulos, C. & Skeperdas, S., 1993. "Gangs as Primitive States," Papers 10-93-25, Pennsylvania State - Department of Economics.
  3. Bester, Helmut & Wärneryd, Karl, 2006. "Conflict and the Social Contract," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 94, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
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