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Welfare effects of forming a criminal organization

Ken Yahagi ()
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Ken Yahagi: Waseda University

European Journal of Law and Economics, 2018, vol. 46, issue 3, No 7, 359-375

Abstract: Abstract This paper develops a simple model to examine the economic consequences of two different criminal market structures in the private protection and extortion industry: (1) horizontal (decentralized) governance and market structure and (2) hierarchical (centralized) governance and market structure with a criminal organization. Forming a criminal organization produces positive or negative effects on its members and social efficiency. These results depend on the potential competitiveness among criminals and the ability of a criminal organization’s boss to target more valuable extortion victims.

Keywords: Conflict; Organized crime; Rent-seeking; Crime; Extortion (search for similar items in EconPapers)
JEL-codes: K42 (search for similar items in EconPapers)
Date: 2018
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Handle: RePEc:kap:ejlwec:v:46:y:2018:i:3:d:10.1007_s10657-018-9600-0