Economics of Whistle-Blowers

There are some things that it seems only government can do, getting people to pay their taxes seems like an obvious one. Once again, the power of the market is surprising:

Informants who turn in tax cheats have to wait years to get their share of any reward from the I.R.S.’s recently expanded whistle-blower program. So hedge funds, private equity groups and other big investors are offering an alternative. They are essentially agreeing to buy a percentage of those future payouts in exchange for a smaller amount upfront to the whistle-blowers.

Via Marginal Revolution