Organized crime, corruption and punishment

Abstract : We analyze an oligopoly model in which differentiated criminal organizations globally compete on criminal activities and engage in local corruption to avoid punishment. When bribing costs are low, that is badly-paid and dishonest law enforcers work in a weak governance environment, and the rents from criminal activity are sufficiently high, we find that increasing policing and sanctions can generate higher crime rates. Indeed, beyond a threshold, further increases in intended expected punishment create incentives for organized crime to extend corruption rings, and ensuing impunity results in a fall of actual expected punishment that yields more rather than less crime.
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Submitted on : Tuesday, November 20, 2012 - 8:41:10 AM
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Maurice Kugler, Thierry Verdier, Yves Zenou. Organized crime, corruption and punishment. Journal of Public Economics, Elsevier, 2005, 89 (9-10), pp.1639-1663. ⟨10.1016/j.jpubeco.2004.05.005,⟩. ⟨halshs-00754068⟩

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