The authors examine the distribution of income when agents allocate their initial endowments between production and appropriation (arms investments, influence or rent-seeking activities). Final output depends on the productive contributions of the agents but is divided between them according to...

Extortion of productive enterprises ('shops') by organized crime groups ('gangs') takes place in virtually all economies. The authors develop a framework to study this activity. The main harm of extortion comes from the long-run erosion and distortion of useful production, as well as from the...