Casual police corruption and the economics of crime

We extend Becker's model of crime by allowing for collusion between an arresting officer and the criminal at the expense of the police department. The weakening in the deterrent power of a given set of criminal sanctions that results is explored in a perfect information setting. Applying a solution concept developed in related work by Cadot we derive optimal policies for each group. We show in particular that the well-established results from the Becker model do not all carry through. In particular we find that the maximal fine may no longer be optimal.