Criminal network, leniency, and market externalities

Giovanni Immordino, Salvatore Piccolo and Paolo Roberti

Journal of Public Economic Theory, 2024, vol. 26, issue 4

Abstract: We analyze the self‐reporting incentives fostered by a leniency program within a criminal network formed by a supplier of an illegal good and his dealers who compete against each other in the product market. We show that when it is viable, a first‐informant rule always performs better than an all‐informant rule—that is, it induces a lower level of crime. Nevertheless, the viability of a first‐informant rule may be compromised if the baseline probability of conviction is sufficiently low, thereby placing disproportionate reliance on leniency over other investigative efforts for securing convictions.

Date: 2024
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