From Wild West to the Godfather: Enforcement Market Structure

41 Pages Posted: 10 Sep 2001 Last revised: 24 Oct 2010

See all articles by James E. Anderson

James E. Anderson

Boston College - Department of Economics; National Bureau of Economic Research (NBER)

Oriana Bandiera

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD); Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: September 2001

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.

Suggested Citation

Anderson, James E. and Bandiera, Oriana, From Wild West to the Godfather: Enforcement Market Structure (September 2001). NBER Working Paper No. w8469, Available at SSRN: https://ssrn.com/abstract=282695

James E. Anderson (Contact Author)

Boston College - Department of Economics ( email )

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National Bureau of Economic Research (NBER)

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Oriana Bandiera

London School of Economics & Political Science (LSE) - Suntory and Toyota International Centres for Economics and Related Disciplines (STICERD) ( email )

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London WC2A 2AE
United Kingdom
+44 20 7955 7519 (Phone)
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Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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Bonn, D-53072
Germany

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