Foreign Direct Investment and Crime Linkage: Drug Traffic and Kidnapping
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Rafael Salvador Espinosa Ramirez
Abstract
We develop a theoretical model in which a country hosts foreign investment in the presence of a drug dealer, acting as a leader, and a drug seller, acting as a follower. A policy addressed to eradicate the drug trafficking encourages the kidnapping activity, and increase the security cost of firms. When the drug is not consumed in the host country the best policy is not to fight against drug trafficking. When the drug is consumed in the host country the optimal policy depends on the social marginal disutility of drug consumption respect to ransom paid by firms. In this case, when social marginal disutility is sufficiently larger than ransom, the government combats drug trafficking, otherwise, there is no policy at all.
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© 2020 Walter de Gruyter GmbH, Berlin/Boston
Artikel in diesem Heft
- Frontmatter
- Research Articles
- On the Choice of Liability Rules
- Social Image Concern and Reference Point Formation
- Extreme Parties and Political Rents
- On the Observational Implications of Knightian Uncertainty
- Functions with Linear Price Elasticity for Forecasting Demand and Supply
- Foreign Direct Investment and Crime Linkage: Drug Traffic and Kidnapping
- Absence of Envy among “Neighbors” Can Be Enough
- Financial Integration, Savings Gluts, and Asset Price Booms
- Social Coordination and Network Formation in Bipartite Networks
- A Choice Model of University Endowments Governance
- Envy Manipulation at Work
- An Entropy-Based Information Sharing Rule for Asymmetric Information Economies
- Notes
- A Comment on Arrow’s Impossibility Theorem
Artikel in diesem Heft
- Frontmatter
- Research Articles
- On the Choice of Liability Rules
- Social Image Concern and Reference Point Formation
- Extreme Parties and Political Rents
- On the Observational Implications of Knightian Uncertainty
- Functions with Linear Price Elasticity for Forecasting Demand and Supply
- Foreign Direct Investment and Crime Linkage: Drug Traffic and Kidnapping
- Absence of Envy among “Neighbors” Can Be Enough
- Financial Integration, Savings Gluts, and Asset Price Booms
- Social Coordination and Network Formation in Bipartite Networks
- A Choice Model of University Endowments Governance
- Envy Manipulation at Work
- An Entropy-Based Information Sharing Rule for Asymmetric Information Economies
- Notes
- A Comment on Arrow’s Impossibility Theorem
