Competitive pressure and corporate crime

Arbeitspapier

This paper explores the relationship between the intensity of competition in product markets and firms' incentives to lower their production costs by illegal means. Our framework combines a Salop circle with a crime model à la Becker, allowing us to differentiate between several measures for the intensity of competition. We establish that more firms in the industry (i.e., lower entry costs) reduce the crime rate. Furthermore, whether more intense competition due to the increased substitutability of products raises or lowers the prevalence of criminal behavior can be clearly linked to the impact of such behavior on firms' production costs. Finally, we find that stricter law enforcement may entice more firms to enter the market, despite the higher expected sanction in the event of wrongdoing.

Object Details

• ISBN: 9783863041090
• Language: Englisch

References and Relationships

• Bibliographic citation: Series: DICE Discussion Paper ; No. 110

Classification and Topics

• Classification: Wirtschaft ; Criminal Law ; Regulated Industries and Administrative Law ; Oligopoly and Other Imperfect Markets
• Subject: product market competition ; crime ; deterrence ; market entry

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Baumann, Florian ; Friehe, Tim
• Event: Veröffentlichung
• (who): Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)
• (where): Düsseldorf
• (when): 2013

Further information

• Handle: http://hdl.handle.net/10419/83497
• Last update: 10.03.2025, 11:44 AM CET