Foreign direct investment, business extortion and drug trafficking
by Rafael S. Espinosa-Ramirez
International Journal of Economics and Business Research (IJEBR), Vol. 26, No. 2, 2023

Abstract: We develop a theoretical model in which a country hosts foreign investment in the presence of a drug dealer, acting as leader, and a drug seller, acting as a follower. A policy addressed to eradicate drug trafficking encourages the business extortion activity, and increase the extortion 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 concerning extortion paid by firms. In this case, when social marginal disutility is sufficiently larger than extortion payment, the government combats drug trafficking; otherwise, there is no policy at all.

Online publication date: Mon, 07-Aug-2023

The full text of this article is only available to individual subscribers or to users at subscribing institutions.

 
Existing subscribers:
Go to Inderscience Online Journals to access the Full Text of this article.

Pay per view:
If you are not a subscriber and you just want to read the full contents of this article, buy online access here.

Complimentary Subscribers, Editors or Members of the Editorial Board of the International Journal of Economics and Business Research (IJEBR):
Login with your Inderscience username and password:

Username:        Password:          Forgotten your password?

Want to subscribe?
A subscription gives you complete access to all articles in the current issue, as well as to all articles in the previous three years (where applicable). See our Orders page to subscribe.

If you still need assistance, please email subs@inderscience.com