The Economics of Organized Crime and Optimal Law Enforcement

By Nuno Garoupa. 2000

117 citations recorded by the source corpus.

This paper extends the optimal law enforcement literature to organized crime. We model the criminal organization as a vertical structure where the principal extracts some rents from the agents through extortion. Depending on the principal's information set, threats may or may not be credible. As long as threats are credible, the principal is able to fully extract rents. In that case, the results obtained by applying standard theory of optimal law enforcement are robust: we argue for a tougher policy. However, when threats are not credible, the principal is not able to fully extract rents and there is violence. Moreover, we show that it is not necessarily true that a tougher law enforcement policy should be chosen when in presence of organized crime.

Subfields: Economics and Econometrics, Sociology and Political Science

View Paper: https://www.semanticscholar.org/paper/d8fb39ca375aa8cac7d7d45460a54b2b9ce07243

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Citations in the corpus

Organized Crime, Corruption and Punishment (2005, background): “From equation (11), we verify that the sign of ∂C∗/∂(φS) depends on −(1−2x∗)+2φS∂x∗/∂(φS).”
On The Economics oF Organized Crime (2008, background): “1 For the Italian mafias see Hess (1973), Arlacchi (1986), and Gambetta (1993), whereas for the American mafias see Reuter (1995) and Jacobs (1999).”