My guest for this episode is Ennio Piano of George Mason University. Our topic is Ennio's work on the economics of biker gangs.
Ennio has two papers on this subject. The first, published in Public Choice, is entitled Free riders: the economics and organization of outlaw motorcycle gangs and it describes the franchise-style model of the Hell's Angels motorcycle gang, and how that model contributed to that gang's rise to prominence. By making the local chapters of the Hell's Angels residual claimants, while the head chapter in Oakland is responsible for the gang's name and reputation, the gang exploits local knowledge while also coordinating activities internationally.
The second paper, Outlaw and economics: Biker gangs and club goods describes how the norms and rituals of biker gangs fit with the theory of club goods. Costly, unreliable motorcycles and even Nazi tattoos can be explained through this theory: they are credible commitments to remain loyal to the club. This behaviour is similar in purpose to rituals practice by many religious sects.
We discuss the history of biker gangs and the gang wars of the 1990s. Finally, Ennio describes the relationship between biker gangs and other criminal organizations such as the Mafia and Mexican drug cartels.