From Wild West to the Godfather: Enforcement Market Structure

James Anderson () and Oriana Bandiera

No 8469, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Weak states enable private enforcement but it does not always fade away in the presence of strong states. We develop a general equilibrium model of the market organization of enforcers (self-enforcers, competitive specialized enforcers or monopoly) who defend endowments from predators. We provide conditions under which a Mafia emerges, persists and is stable. Mafias are most likely to emerge at intermediate stages of economic development. Private enforcers might provide better enforcement to the rich than would a welfare-maximizing state - hence the State may find it difficult to replace the Mafia or competitive private enforcers.

JEL-codes: K0 H1 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law and nep-mic
Date: 2001-09
Note: ITI
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