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Competition in Law Enforcement and Capital Allocation

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Abstract

This paper studies interjurisdictional competition in the fight against crime and its impact on occupational choice and the allocation of capital. In a world where capital is mobile, jurisdictions are inhabited by individuals who choose to become workers or criminals. Because the return of the two occupations depends on capital, and because investment in capital in a jurisdiction depends on its crime rate, there is a bi-directional relationship between capital investment and crime which may lead to capital concentration. By investing in costly law enforcement, a jurisdiction makes the choice to become criminal less attractive, which reduces the number of criminals and makes its territory more secure. This increased security increases the attractiveness of the jurisdiction for investors and this can eventually translate into more capital being invested. We characterize the Nash equilibria — some entailing a symmetric outcome, others an asymmetric one — and study their efficiency.

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Paper provided by Department of Economics, Simon Fraser University in its series Discussion Papers with number dp07-03.

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Length: 33 pages
Date of creation: May 2007
Date of revision:
Handle: RePEc:sfu:sfudps:dp07-03

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Postal: Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
Phone: (778)782-3508
Fax: (778)782-5944
Web page: http://www.sfu.ca/economics.html
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Postal: Working Paper Coordinator, Department of Economics, Simon Fraser University, 8888 University Drive, Burnaby, BC, V5A 1S6, Canada
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Keywords: Crime; Occupational Choice; Capital Location; Law Enforcement;

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Citations

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Cited by:
  1. Guillaume Cheikbossian & Nicolas Marceau, 2007. "Why Is Law Enforcement Decentralized?," Cahiers de recherche 0719, CIRPEE.
  2. Deffains, Bruno & Demougin, Dominique, 2008. "Legal competition, political process and irreversible investment decisions," European Journal of Political Economy, Elsevier, vol. 24(3), pages 615-627, September.
  3. Jenny Monheim-Helstroffer & Marie Obidzinski, 2010. "Optimal discretion in asylum lawmaking," Post-Print hal-00447157, HAL.
  4. Bertrand Crettez & Bruno Deffains & Régis Deloche, 2009. "On the optimal complexity of law and legal rules harmonization," European Journal of Law and Economics, Springer, vol. 27(2), pages 129-142, April.
  5. Baumann, Florian & Friehe, Tim, 2013. "Status concerns as a motive for crime?," DICE Discussion Papers 93, Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
  6. Bruno Deffains & Dominique Demougin, 2006. "Institutional Competition, Political Process and Holdup," SFB 649 Discussion Papers SFB649DP2006-027, Sonderforschungsbereich 649, Humboldt University, Berlin, Germany.

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