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Theft in equilibrium

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  • Lasso de la Vega, Casilda
  • Volij, Oscar
  • Weinschelbaum, Federico

Abstract

We incorporate theft into the standard partial equilibrium model. We focus on two scenarios, one in which the whole wealth is subject to theft, and another in which only final goods are stealable. There are major differences between the two scenarios. In the first one, a policy that increases output reduces crime, which is not necessarily so in the second one. In the first model, public police protection reduces crime, but in the second one it may very well increase it. In the first model, the competitive equilibrium allocates private police efficiently conditional on the crime rate, but does not in the second model. The differences are due to the fact that while in both models output markets affect crime, only in the second model does crime affect output markets.

Suggested Citation

  • Lasso de la Vega, Casilda & Volij, Oscar & Weinschelbaum, Federico, 2021. "Theft in equilibrium," European Economic Review, Elsevier, vol. 139(C).
    • Handle: RePEc:eee:eecrev:v:139:y:2021:i:c:s0014292121001926
    DOI: 10.1016/j.euroecorev.2021.103869
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    Cited by:

    1. Casilda Lasso de la Vega & Oscar Volij & Federico Weinschelbaum, 2023. "When do more police induce more crime?," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 76(3), pages 759-778, October.
    2. Casilda Lasso de la Vega & Oscar Volij & Federico Weinschelbaum, 2021. "Can more police induce more crime?," Working Papers 2107, Ben-Gurion University of the Negev, Department of Economics.

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    More about this item

    Keywords

    Theft; Economic equilibrium; Appropriation; Police; Crime;
    All these keywords.

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • H23 - Public Economics - - Taxation, Subsidies, and Revenue - - - Externalities; Redistributive Effects; Environmental Taxes and Subsidies
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law

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