Extortion as an obstacle to economic growth: A dynamic game analysis
In this paper we use a differential game analysis to study the dynamic strategic interaction between a criminal gang extorting money from local shop- owners and the police force. In particular, we are interested in characterizing which factors are important in determining whether the capital stock of local shop-owners keeps growing in spite of extortion or the criminal activity leads to a phase of stagnation of the local economy. A Markov perfect equilibrium of the game is characterized in order to address this question and several policy implications are derived to facilitate growth in regions affected by extortion.
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|Date of creation:||01 Apr 2001|
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- Levitt, Steven D, 1997.
"Using Electoral Cycles in Police Hiring to Estimate the Effect of Police on Crime,"
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- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, June.
- Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
- Shimomura, Koji, 1991. "The feedback equilibria of a differential game of capitalism," Journal of Economic Dynamics and Control, Elsevier, vol. 15(2), pages 317-338, April.
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