Extortion as an Obstacle to Economic Growth: A Dynamic Game Analysis

Herbert Dawid, Gustav Feichtinger and Andreas Novak
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Gustav Feichtinger: Vienna University of Technology
Andreas Novak: University of Vienna

Game Theory and Information from EconWPA

Abstract: In this paper we use a differential game analysis to study the dynamic strategic interaction between a criminal gang extorting money from local shop-owners and the local police force. In particular, we are interested in characterizing which factors are important in determining whether the capital stock of local shop-owners keeps growing in spite of extortion or the criminal activity leads to a phase of stagnation of the local economy. A Markov perfect equilibrium of the game is characterized in order to address this question and several policy implications are derived to facilitate growth in regions affected by extortion.

Keywords: Extortion; Differential Games; Capital Accumulation (search for similar items in EconPapers)
JEL-codes: C73 D92 K42 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-law
Date: 2001-01-23
Note: Type of Document - Acrobat PDF; prepared on IBM PC; to print on HP; pages: 25; figures: included

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http://129.3.20.41/eps/game/papers/0012/0012003.pdf (application/pdf)

Related works:
Working Paper: Extortion as an obstacle to economic growth: A dynamic game analysis (2001)
Journal Article: Extortion as an obstacle to economic growth: a dynamic game analysis (2002)
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Persistent link: http://EconPapers.repec.org/RePEc:wpa:wuwpga:0012003

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