Earlier I blogged on the paper by Peter T. Leeson "An-arrgh-chy: The Law and Economics of Pirate Organization", Journal of Political Economy, Volume 115, Number 6, December 2007, which looked at the internal governance institutions for seventeenth and eighteenth-century pirates. Now Lesson has a new working paper out investigating the economics of infamous pirate practices. You can download it here: "Pirational Choice: The Economics of Infamous Pirate Practices." (pdf).
Lesson investigates the profit-maximising strategies of violent criminal organisation by examining the economics of infamous pirate practices. He explores three practices pirates used to reduce the costs and enhance the revenues of their criminal enterprise. First, he looks at pirate flag, Jolly Roger, which pirates used to signal their identity as unconstrained outlaws, enabling them to take prizes without costly conflict. Second, he considers how pirates used heinous torture together with public displays of madness and published advertisement of their fiendishness to establish a fearsome reputation and piratical brand name that prevented costly captive behaviours. Third, he analyses how pirates used artificial impressment to mitigate the increased risk of pirating in the 18th century as a result of English legal innovations. The unique context in which pirates sought profits, not a difference in pirate rationality, explains pirates eccentric and often bizarre behaviour. Pirates infamous practices improved their efficiency "on the account", enhancing the profitability of their criminal enterprise.
(HT: The Austrian Economists)
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