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This article presents a model describing a symbiotic relationship between criminals and a partnership of protection providers, called the Firm. The partners of the Firm earn profits as they have market power in the supply of protection. The Firm recruits its new partners among criminals. As a result, the prospect of graduating to the Firm adds an incentive for violent crime. The result is a violence multiplier where more violence increases the profits to the partners of the Firm, in turn contributing to the incentive for violence. The violence multiplier also generates an incentive for the protection providers to welcome new partners, even though new partners dilute the profits. The model combines elements from contest theory and rent-seeking theory but, nevertheless, generates results that are in contrast to standard results from the rent-seeking literature. For example, due to the interdependence between protection providers and criminals, a decrease in the cost of violence increases violence more than pari passu and increases the value of being a criminal. Also, tougher competition between criminals may benefit all of them. The empirical relevance of key elements of this framework are confirmed by exploring unique data on incarcerated youth in South Africa. The empirical results confirm a hierarchical gang structure and indicate that this structure does indeed promote violence.

We study the political economy of migration policies in oil-rich Gulf countries focusing on two policy dimensions: a) the number of migrants allowed into the country and b) the assimilation of migrants, where less assimilated migrants on short-term contracts remit more. We develop a two goods macro model with traded and non-traded goods. The migration of guest workers leads to a wage drop hurting citizen workers, while capitalists and oil rent earners benefit. When foreign exchange is remitted out of the economy, the real exchange rate depreciates. The remittance outflow benefits oil rent earners while capitalists and workers lose. Hence the three classes of domestic agents have diverging interests with regard to their preferred policy mix. The results are important for understanding the changes in migration policy in the Gulf, in particular in relation to the sharing of oil rents and on the political influence of the working class and the capitalists.

In a contest with positional dynamics between an incumbent and a challenger i) inequality of power may magnify conflicts, ii) more severe conflicts can go together with lower turnover of incumbents, and iii) power can be self defeating as cost advantages can reduce pay-offs. These three propositions of our paper are contrary to the implications of static conflict models. They follow from incorporating positional dynamics into the standard static approach. Such positional dynamics are relevant for competition in battlefields, politics, and market places.

The fight for power is not only over immediate rents, but also over advantageous positions in future power struggles. When incumbency yields an extra fighting edge, current struggles involve high stakes as a victory today may guarantee the victory also tomorrow. Such an incumbency edge may stem from the control of the army, the police and other instruments reserved for the government. The conclusions drawn from static conflict models are turned on their head when the fight is also over the incumbency edge. A sharper incumbency edge increases the implicit prizes of winning. The fighting intensity may therefore rise when the strength of each side becomes more unequal. Unbalanced fights can last long and become particularly severe. This is in contrast to the standard result that equal strengths give the most intense fighting.