The market for extortion and protection

Abstract

States worldwide face significant challenges in maintaining the Weberian concept of monopolizing the legitimate use of violence and ensuring the protection of individuals within their territories. The presence of non-state groups engaging in protection and extortion thwarts efforts to provide security, enforce property rights, address underdevelopment, and foster economic growth. This paper develops a model to analyze the dynamics of strategic competition in extortion and protection provision under the shadow of the state, examining the impact of various state policies on the outcomes of this violent competition.