Organized Crime, Corruption and Punishment

Thierry Verdier, Yves Zenou and Maurice Kugler ()

No 3806, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We analyse an oligopoly model in which differentiated criminal organizations compete on criminal activities and engage in 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. When bribing costs are low - that is badly-paid and dishonest law enforcers working 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 non-monotonic. Beyond a threshold, increases in expected punishment induce organized crime to corruption, and ensuing impunity leads to higher rather than lower crime.

Keywords: Deterrence; Organized crime; Corruption; Strategic complements; Oligopoly (search for similar items in EconPapers)
JEL-codes: K42 L13 (search for similar items in EconPapers)
Date: 2003-02
New Economics Papers: this item is included in nep-law
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Citations: View citations in EconPapers (11)

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Related works:
Journal Article: Organized crime, corruption and punishment (2005)
Working Paper: Organized crime, corruption and punishment (2005)
Working Paper: Organized Crime, Corruption and Punishment (2003)
Working Paper: Organized Crime, Corruption and Punishment (2003)
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