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Organised crime, corruption and punishment

Organised crime, corruption and punishment
Organised crime, corruption and punishment
We analyse an oligopoly model in which differentiated criminal organizations compete on criminal activities and engage in corruption to avoid punishment. When law enforcers are sufficiently well-paid, difficult to bribe and corruption detection highly probable, we show that increasing policing or sanctions effectively deters crime. When bribing costs are low - that is badly-paid and dishonest law enforcers working in a weak governance environment - and the rents from criminal activity relative to legal activity are sufficiently high, we find that increasing policing and sanctions can generate higher crime rates. In particular, the relationship between the traditional instruments of deterrence, namely intensification of policing and increment of sanctions, and crime is non-monotonic. Beyond a threshold, increases in expected punishment induce organized crime to corruption, and ensuing impunity leads to higher rather than lower crime.
corruption, oligopoly, organized crime, strategic complements
3806
CEPR
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454
Zenou, Yves
f7c3b72f-b6b6-4550-8b0f-00a127af082e
Kugler, Maurice
4c79c98c-1810-4351-bf16-faeec2227e45
Verdier, Thierry
87c483ea-f473-408f-9776-d0381cab6454
Zenou, Yves
f7c3b72f-b6b6-4550-8b0f-00a127af082e
Kugler, Maurice
4c79c98c-1810-4351-bf16-faeec2227e45

Verdier, Thierry, Zenou, Yves and Kugler, Maurice (2003) Organised crime, corruption and punishment CEPR (CEPR Discussion Paper, 3806)

Record type: Monograph (Discussion Paper)

Abstract

We analyse an oligopoly model in which differentiated criminal organizations compete on criminal activities and engage in corruption to avoid punishment. When law enforcers are sufficiently well-paid, difficult to bribe and corruption detection highly probable, we show that increasing policing or sanctions effectively deters crime. When bribing costs are low - that is badly-paid and dishonest law enforcers working in a weak governance environment - and the rents from criminal activity relative to legal activity are sufficiently high, we find that increasing policing and sanctions can generate higher crime rates. In particular, the relationship between the traditional instruments of deterrence, namely intensification of policing and increment of sanctions, and crime is non-monotonic. Beyond a threshold, increases in expected punishment induce organized crime to corruption, and ensuing impunity leads to higher rather than lower crime.

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More information

Published date: 2003
Keywords: corruption, oligopoly, organized crime, strategic complements

Identifiers

Local EPrints ID: 39784
URI: https://eprints.soton.ac.uk/id/eprint/39784
PURE UUID: 576d3067-81de-41ec-9cd9-d7117aa21403

Catalogue record

Date deposited: 29 Jun 2006
Last modified: 17 Jul 2017 15:35

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