The Economics of Organized Crime and Optimal Law Enforcement

Universitat Pompeu Fabra Economics WP No. 246

Posted: 9 Mar 1998

See all articles by Nuno Garoupa

Nuno Garoupa

George Mason University - Antonin Scalia Law School, Faculty

Date Written: January 1998

Abstract

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.

JEL Classification: K4

Suggested Citation

Garoupa, Nuno, The Economics of Organized Crime and Optimal Law Enforcement (January 1998). Universitat Pompeu Fabra Economics WP No. 246. Available at SSRN: https://ssrn.com/abstract=65428

Nuno Garoupa (Contact Author)

George Mason University - Antonin Scalia Law School, Faculty ( email )

3301 Fairfax Drive
Arlington, VA 22201
United States

Register to save articles to
your library

Register

Paper statistics

Abstract Views
1,044
PlumX Metrics
!

Under construction: SSRN citations while be offline until July when we will launch a brand new and improved citations service, check here for more details.

For more information