State-Sponsored Protection Rackets
State-Sponsored Protection Rackets
Regulating the Market for Counterfeit Clothing in Argentina
That illegal markets thrive is something of a puzzle to sociology. Despite the lack of legal frames—crucial for conflict resolution, regulation of competition, and formal sources of credit—new illegal markets continue to emerge. Thus an analysis of informal social mechanisms is essential for a better understanding of illegal markets’ internal coordination. The main goal of this chapter is to dissect the role of one of these mechanisms—state-sponsored protection rackets—in the context of illegal markets. This type of protection racket means a selective non-enforcement of the law, an action carried out intentionally by politicians and police forces in order to capture economic resources. I provide evidence that such an informal mechanism is present on a massive scale at La Salada, a huge illegal and informal marketplace close to Buenos Aires city center. The chapter seeks to make a contribution on informal mechanisms fostering unlawful exchanges.
Keywords: illegal markets, state-sponsored protection rackets, counterfeit clothing, La Salada, informal institutions, non-enforcement, police, politics, economic sociology, legitimacy
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