Does it matter who extorts? Extortion by competent and incompetent enforcers*

Abstract

Corruption can undermine law enforcement because it allows non-compliant agents to reduce their sanctions by paying a bribe (Becker, 1968;Becker & Stigler, 1974). The literature on corruption has identified two broad categories of bribes Burguet et al. (2018). The first type occurs when law-enforcement officers (henceforth, officers) accept a (smaller) bribe instead of sanctioning or fining those who are non-compliant. This form of bribery is collusive since both the officer and the non-complaint stand to gain by engaging in bribery. The second type of bribery, termed extortion, occurs when officers demand payments from compliant agents. Extortion, unlike bribery is non-collusive since the compliant do not gain by making this payment.