Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/81226
Authors: 
Kugler, Maurice
Verdier, Thierry
Zenou, Yves
Year of Publication: 
2003
Series/Report no.: 
IUI Working Paper 600
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 law enforcers are sufficiently well-paid, difficult to bribe and corruption detection highly probable, we show that increasing policing or sanctions effectively deters crime. However, 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 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 nonmonotonic. Beyond a threshold, increases in expected punishment induce organized crime to corruption, and ensuing impunity leads too higher rather than lower crime.
Subjects: 
Deterrence
Organized Crime
Corruption
Oligopoly
Free Entry
JEL: 
K42
L13
Document Type: 
Working Paper

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