The paper argues both theoretically and empirically that incidence of extortion reduces the flow of private investment at a state in a federation. The states compete in terms of their firm/industry-specific investment to retain the investment in their own jurisdiction. It uses the data from Indian states for the empirical analysis. The spatial regression technique used in the analysis takes into account the proximity of the states in terms of their industry-specific investment and finds that the states similar in terms of industry-specific investment have similar private manufacturing investment. Also, a higher rate of extortion in a state creates a negative spill-over effect on the flow of private investment in the state from the private investment in other similar states. The results suggest that a policy of controlling extortion has significant return in terms of flow of private investment in a state, which is not mitigated through industry-specific investment.

这篇论文从理论上和实证上都论证了敲诈勒索的发生减少了联邦中一个州的私人投资流量。各州在其公司/行业特定投资方面进行竞争，以将投资保留在自己的管辖范围内。它使用来自印度各州的数据进行实证分析。分析中使用的空间回归技术考虑了各州在特定行业投资方面的接近程度，并发现在特定行业投资方面相似的州拥有相似的私人制造业投资。此外，一个州的较高勒索率对该州的私人投资从其他类似州的私人投资流动产生负面溢出效应。