A tidy example of how government can corrupt business, rather than the far more frequently chronicled reverse case:
In my idyllic suburban hometown of Wellesley, Massachusetts, the police shut down a brothel a few days ago. According to the Wellesley Townsman, one of those arrested for running the business was a man named William Eastwick.
The paper also notes that six months ago the Wellesley police shut down a similar operation nearby. That police action was based on a tip from the same William Eastwick. Oddly, when referring to the Eastwick tip, the town paper says "it is unclear why he did that."
The temptation to shut down your competitors using the heavy hand of the state is ever-present. This little example of dueling rats is basically the same thing as, say, protective tariffs on steel or corn subsidies. Because the businesses in question happen to be illegal, the instruments are even blunter than usual.
Via Greg Mankiw