Stirring up a hornets’ nest: Geographic distribution of crime

How to make police deployment strategies more efficient is becoming the crucial research agenda for the economics of crime and law enforcement. We contribute to this agenda developing the first general equilibrium model designed to study how the geographic distribution of police protection affects the decision to pursue illegal activities, the intensity and location of crime, residential choices, housing prices, and the welfare of different socioeconomic groups. The target is to explore the positive and normative long-run effects of different ways of spatially allocating police forces in an urban area. We find that, when the police protect some neighborhoods (concentrated protection), the city becomes segregated, while when the police are evenly deployed across the city (dispersed protection), an integrated city emerges. Unequal societies face a difficult dilemma in that concentrated protection maximizes aggregate welfare but exacerbates social disparities. Taxes and subsidies can be employed to offset the disadvantages of police concentration. Private security makes an integrated city less likely to occur in equilibrium. Even under dispersed public protection, rich agents may use private security to endogenously isolate themselves in closed neighborhoods.