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The welfare cost of lawlessness : evidence from Somali piracy
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Besley, Timothy, Fetzer, Thiemo and Mueller, Hannes (2015) The welfare cost of lawlessness : evidence from Somali piracy. Journal of the European Economic Association, 13 (2). pp. 203-239. doi:10.1111/jeea.12114 ISSN 1542-4766.
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Official URL: http://dx.doi.org/10.1111/jeea.12114
Abstract
In spite of general agreement that establishing the rule of law is central to properly functioning economies, little is known about the cost of law and order breakdowns. This paper studies a specific context of this by estimating the effect of Somali piracy attacks on shipping costs using data on shipping contracts in the dry bulk market. To estimate the effect of piracy, we look at shipping routes whose shortest path exposes them to piracy and find that the increase in attacks in 2008 led to around an 8% to 12% increase in costs. From this we calculate the welfare loss imposed by piracy. We estimate that generating around 120 USD million of revenue for Somali pirates led to a welfare loss in excess of 630 USD million, making piracy an expensive way of making transfers.
| Item Type: | Journal Article | |||||||||
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| Subjects: | G Geography. Anthropology. Recreation > G Geography (General) H Social Sciences > HE Transportation and Communications Q Science > QA Mathematics |
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| Divisions: | Faculty of Social Sciences > Economics | |||||||||
| Library of Congress Subject Headings (LCSH): | Shipping, Pirates -- Somali -- Economic aspects, Piracy -- Mathematical models | |||||||||
| Journal or Publication Title: | Journal of the European Economic Association | |||||||||
| Publisher: | Oxford University Press | |||||||||
| ISSN: | 1542-4766 | |||||||||
| Official Date: | 1 April 2015 | |||||||||
| Dates: |
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| Volume: | 13 | |||||||||
| Number: | 2 | |||||||||
| Page Range: | pp. 203-239 | |||||||||
| DOI: | 10.1111/jeea.12114 | |||||||||
| Status: | Peer Reviewed | |||||||||
| Publication Status: | Published | |||||||||
| Access rights to Published version: | Restricted or Subscription Access | |||||||||
| Date of first compliant deposit: | 19 July 2018 | |||||||||
| Date of first compliant Open Access: | 19 July 2018 | |||||||||
| RIOXX Funder/Project Grant: |
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