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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- Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
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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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- Feichtinger, Gustav & Wirl, Franz, 1993. "A Dynamic Variant of the Battle of the Sexes," International Journal of Game Theory, Springer;Game Theory Society, vol. 22(4), pages 359-80.
- Drew Fudenberg & Jean Tirole, 1991. "Game Theory," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262061414, March.
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