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From Wild West to the Godfather: Enforcement Market Structure

Author

Listed:
  • James E. Anderson
  • Oriana Bandiera

Abstract

Weak states enable private enforcement but it does not always fade away in the presence of strong states. We develop a general equilibrium model of the market organization of enforcers (self-enforcers, competitive specialized enforcers or monopoly) who defend endowments from predators. We provide conditions under which a Mafia emerges, persists and is stable. Mafias are most likely to emerge at intermediate stages of economic development. Private enforcers might provide better enforcement to the rich than would a welfare-maximizing state - hence the State may find it difficult to replace the Mafia or competitive private enforcers.

Suggested Citation

  • James E. Anderson & Oriana Bandiera, 2001. "From Wild West to the Godfather: Enforcement Market Structure," NBER Working Papers 8469, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8469
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    Cited by:

    1. Marianna Belloc, 2006. "Institutions and International Trade: A Reconsideration of Comparative Advantage," Journal of Economic Surveys, Wiley Blackwell, vol. 20(1), pages 3-26, February.
    2. Robert M. Bushman & Joseph D. Piotroski & Abbie J. Smith, 2004. "What Determines Corporate Transparency?," Journal of Accounting Research, Wiley Blackwell, vol. 42(2), pages 207-252, May.
    3. Anderson, James E. & Bandiera, Oriana, 2005. "Private enforcement and social efficiency," Journal of Development Economics, Elsevier, vol. 77(2), pages 341-366, August.

    More about this item

    JEL classification:

    • K0 - Law and Economics - - General
    • H1 - Public Economics - - Structure and Scope of Government

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