The market for gossip: punish paparazzi and you will produce inefficiency

What do you call the action of digging up dirt that otherwise would remain buried, and then reburying it after being paid? Blackmail is probably the most intuitive answer. Unproductive activity is the most bizarre, unless you are an economist. Business is the answer that springs out when the dirt at stake is a piece of gossip regarding very famous people. Yet, in Italy, none of these answers is correct. In Italy, the act of digging up dirt to rebury it once paid is called extortion, and it is a criminal offence that is harshly punished. Starting from a case that made a stir in Italy – the case of Fabrizio Corona – the paper analyses Italian criminal law on extortion, discussing the values justifying its harsh punishment as well as the consequences that the lack of a crime of blackmail produces. Then, the paper explores the economics of the mere act of “digging up dirt, to rebury it in exchange for money”, so as to show that, within the market for gossip, this conduct may be an efficient behaviour. Next, the paper discusses the conflict between right of image and social welfare as the values underpinning the (Italian) criminal law and the law and economics approach respectively. Finally, on the bases of these insights, the paper suggests how to optimally reform the criminal law about the act of “digging up dirt to rebury it in exchange for money”.