Abstract
Police complicity in organized crime is not uncommon, yet it is extremely difficult to examine empirically. Using unique sex transaction data from China, we show that police can be complicit in organized prostitution. Specifically, we document that sauna houses and massage parlors with greater neighborhood police density are likely to be “protected” by police and thus can host higher-risk, higher-penalty sex business. The complicity effect is particularly salient during periods of local prostitution crackdowns, implying selective enforcement. Changes in local leadership and visits of the central government’s discipline teams can attenuate the complicity effect.