Corruption, organized crime and the bright side of subversion of law

We study an enforcement model in which, as soon as a Legislator grants an amnesty to low-rank criminals cooperating with the justice, top criminals react by bribing public officials in order to avoid being sanctioned. We show that, to prevent this form of subversion of law, the optimal policy must grant leniency not only to low-rank criminals but also to officials who plead guilty and report bribe-givers. By doing so, the policy increases the conviction risk not only for top criminals but also for their soldiers. This higher risk increases the reservation wage that top criminals must pay in order to recruit soldiers and therefore reduces the crime profitability (the bright side of subversion of law).