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Optimal law enforcement and criminal organization

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  • Nuno Garoupa

Abstract

In this paper, we take an organizational view of organized crime. In particular, we study the organizational consequences of product illegality attending at the following characteristics: (i) contracts are not enforceable in court, (ii) all participants are subject to the risk of being punished, (iii) employees present a major threat to the entrepreneur having the most detailed knowledge concerning participation, (iv) separation between ownership and management is difficult because record-keeping and auditing augments criminal evidence.

Suggested Citation

  • Nuno Garoupa, 1999. "Optimal law enforcement and criminal organization," Economics Working Papers 366, Department of Economics and Business, Universitat Pompeu Fabra.
  • Handle: RePEc:upf:upfgen:366
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    File URL: https://econ-papers.upf.edu/papers/366.pdf
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    References listed on IDEAS

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    1. Backhaus, Jürgen G., 1979. "Defending organized crime? A note," Discussion Papers, Series I 120, University of Konstanz, Department of Economics.
    2. Arun S. Malik, 1990. "Avoidance, Screening and Optimum Enforcement," RAND Journal of Economics, The RAND Corporation, vol. 21(3), pages 341-353, Autumn.
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    4. Shavell, Steven, 1997. "The optimal level of corporate liability given the limited ability of corporations to penalize their employees," International Review of Law and Economics, Elsevier, vol. 17(2), pages 203-213, June.
    5. Mathewson, G Frank & Winter, Ralph A, 1985. "The Economics of Franchise Contracts," Journal of Law and Economics, University of Chicago Press, vol. 28(3), pages 503-526, October.
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    7. Steven Shavell & A. Mitchell Polinsky, 2000. "The Economic Theory of Public Enforcement of Law," Journal of Economic Literature, American Economic Association, vol. 38(1), pages 45-76, March.
    8. Stergios Skaperdas, 2001. "The political economy of organized crime: providing protection when the state does not," Economics of Governance, Springer, vol. 2(3), pages 173-202, November.
    9. Garoupa, Nuno, 2000. "The Economics of Organized Crime and Optimal Law Enforcement," Economic Inquiry, Western Economic Association International, vol. 38(2), pages 278-288, April.
    10. Dick, Andrew R., 1995. "When does organized crime pay? A transaction cost analysis," International Review of Law and Economics, Elsevier, vol. 15(1), pages 25-45, January.
    11. Garoupa, Nuno, 1997. " The Theory of Optimal Law Enforcement," Journal of Economic Surveys, Wiley Blackwell, vol. 11(3), pages 267-295, September.
    12. Konrad, Kai A. & Skaperdas, Stergios, 1997. "Credible threats in extortion," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 23-39, May.
    13. Alexander, Barbara J, 1997. "The Rational Racketeer: Pasta Protection in Depression Era Chicago," Journal of Law and Economics, University of Chicago Press, vol. 40(1), pages 175-202, April.
    14. Klein, Benjamin & Murphy, Kevin M, 1997. "Vertical Integration as a Self-Enforcing Contractual Arrangement," American Economic Review, American Economic Association, vol. 87(2), pages 415-420, May.
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    Citations

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    Cited by:

    1. Emilie Dargaud & Armel Jacques, 2015. "Hidden collusion by decentralization: firm organization and antitrust policy," Journal of Economics, Springer, vol. 114(2), pages 153-176, March.
    2. Giovanni Mastrobuoni, 2013. "The Value of Connections: Evidence from the Italian-American Mafia," Carlo Alberto Notebooks 335, Collegio Carlo Alberto.
    3. Cesar Alonso & Nuno Garoupa & Marcelo Perera & Pablo Vazquez, 2008. "Immigration and Crime in Spain, 1999-2006," Working Papers 2008-34, FEDEA.
    4. Hauret, Laetitia & Langlais, Eric & Sonntag, Carine, 2009. "On the deterrent effect of individual versus collective liability in criminal organizations," MPRA Paper 14762, University Library of Munich, Germany.
    5. Friehe, Tim, 2013. "Tempting righteous citizens? Counterintuitive effects of increasing sanctions in the realm of organized crime," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 44(C), pages 37-40.
    6. Lenin Arango Castillo, 2011. "Tráfico de drogas, políticas de disuasión y violencia en México," Estudios Económicos, El Colegio de México, Centro de Estudios Económicos, vol. 26(2), pages 157-185.
    7. Vimal Kumar & Stergios Skaperdas, 2008. "On The Economics oF Organized Crime," Working Papers 070815, University of California-Irvine, Department of Economics.
    8. Slim, Sadri, 2009. "Du refus de vente au don: une explication de la formation du prix par l´affect
      [From rejection of exchange to gift: regard as an explanation of prices]
      ," MPRA Paper 15317, University Library of Munich, Germany, revised 24 Apr 2009.
    9. Petter Gottschalk & Robert Smith, 2011. "Criminal entrepreneurship, white-collar criminality, and neutralization theory," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing, vol. 5(4), pages 300-308, October.
    10. Bruce L. Benson & Paul R. Zimmerman, 2010. "Conclusion," Chapters,in: Handbook on the Economics of Crime, chapter 20 Edward Elgar Publishing.
    11. Maria Bigoni & Sven-Olof Fridolfsson & Chloé Le Coq & Giancarlo Spagnolo, 2015. "Trust, Leniency, and Deterrence," Journal of Law, Economics, and Organization, Oxford University Press, vol. 31(4), pages 663-689.
    12. Saitis, Athanasios, 2013. "Kartellbekämpfung und interne Kartellstrukturen: Ein netzwerktheoretischer Ansatz," FZID Discussion Papers 85-2013, University of Hohenheim, Center for Research on Innovation and Services (FZID).
    13. Mastrobuoni Giovanni & Patacchini Eleonora, 2012. "Organized Crime Networks: an Application of Network Analysis Techniques to the American Mafia," Review of Network Economics, De Gruyter, vol. 11(3), pages 1-43, September.
    14. Bigoni, Maria & Fridolfsson, Sven-Olof & Le Coq, Chloé & Spagnolo, Giancarlo, 2012. "Trust and Deterrence," CEPR Discussion Papers 9002, C.E.P.R. Discussion Papers.
    15. Giovanni Mastrobuoni & Eleonora Patacchini, 2010. "Understanding Organized Crime Networks: Evidence Based on Federal Bureau of Narcotics Secret Files on American Mafia," Carlo Alberto Notebooks 152, Collegio Carlo Alberto.
    16. Russell S. Sobel & Brian J. Osoba, 2009. "Youth Gangs as Pseudo-Governments Implications for Violent Crime," Southern Economic Journal, Southern Economic Association, vol. 75(4), pages 996-1018, April.
    17. DeAngelo, Gregory, 2012. "Making space for crime: A spatial analysis of criminal competition," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 42-51.
    18. repec:eee:jeborg:v:141:y:2017:i:c:p:43-63 is not listed on IDEAS
    19. Emilie Dargaud & Armel Jacques, 2015. "Endogenous firms' organization, internal audit and leniency programs," Working Papers halshs-01199268, HAL.
    20. Flores, Daniel, 2016. "Violence and law enforcement in markets for illegal goods," International Review of Law and Economics, Elsevier, vol. 48(C), pages 77-87.
    21. Chang, Juin-Jen & Lu, Huei-Chung & Wang, Ping, 2013. "Search for a theory of organized crimes," European Economic Review, Elsevier, vol. 62(C), pages 130-153.
    22. Nuno Garoupa & Jonathan Klick & Francesco Parisi, 2006. "A law and economics perspective on terrorism," Public Choice, Springer, vol. 128(1), pages 147-168, July.
    23. Alessio D'Amato & Massimiliano Mazzanti & Francesco Nicolli, 2011. "Waste Sustainability, Environmental Management and Mafia: Analysing Geographical and Economic Dimensions," CEIS Research Paper 213, Tor Vergata University, CEIS, revised 24 Oct 2011.
    24. Petter Gottschalk & Robert Smith, 2011. "Criminal entrepreneurship, white-collar criminality, and neutralization theory," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing, vol. 5(2), pages 300-308, September.
    25. repec:bla:manchs:v:85:y:2017:i:5:p:541-576 is not listed on IDEAS

    More about this item

    Keywords

    Organized crime; punishment; plea-bargaining;

    JEL classification:

    • K4 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior

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