Organised Crime, Insider Information and Optimal Leniency

21 Pages Posted: 20 Nov 2017

See all articles by Salvatore Piccolo

Salvatore Piccolo

University of Bergamo, Compass Lexecon and CSEF

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF)

Date Written: November 2017

Abstract

When ‘low‐rank’ criminals are offered to cooperate with justice in exchange of judicial leniency, their information generates ex post rents that may actually favour their bosses and increase the crime profitability. Hence, an optimal leniency policy must trade off the positive impact of helpful disclosure of insider information and the positive externality that these rents exert on the organisation's returns from crime. Due to this tension, the amnesty that minimises the probability of crime induces the Legislator to restrict the access to the programme, by excluding informants owning potentially useful knowledge. This result survives to a number of robustness checks.

Suggested Citation

Piccolo, Salvatore and Immordino, Giovanni, Organised Crime, Insider Information and Optimal Leniency (November 2017). The Economic Journal, Vol. 127, Issue 606, pp. 2504-2524, 2017, Available at SSRN: https://ssrn.com/abstract=3073761 or http://dx.doi.org/10.1111/ecoj.12382

Salvatore Piccolo (Contact Author)

University of Bergamo, Compass Lexecon and CSEF ( email )

via de caniana 2
24127
Bergamo, BG 24127
Italy

Giovanni Immordino

University of Salerno - Centre for Studies in Economics and Finance (CSEF) ( email )

84084 Fisciano, Salerno
Italy

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