Public Criminals
Abstract
This paper uses rational choice theory to explain why drug traffickers in Rio de Janeiro’s favelas operate in plain sight despite constant threats from police and rivals. We argue that Rio’s traffickers remain visible because they have a quid pro quo with local residents. In exchange for supplying local governance, the traffickers get the support and silence of locals. To ground our argument, we develop a model in which criminals choose how to protect themselves. They can pick between hiding and exposure as well as a mix of protection investments including violence and cash bribes. Because violence can deter many enemies simultaneously, the model predicts that apparently reckless visibility can be profit-maximizing when three conditions hold: non-resident demand is large, enemies can enter freely, and local residents highly value informal governance. Evidence from Rio’s context meets these conditions.