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Crime and durable goods

Author

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  • Galiani, Sebastian
  • Jaitman, Laura
  • Weinschelbaum, Federico

Abstract

We develop a theoretical model to study how changes in the durability of the goods affect prices of stolen goods, the incentives to steal and the equilibrium crime rate. When studying the production of durable goods, we find that the presence of crime affects consumer and producer surplus and thus their behaviour, market equilibrium, and, in turn, the social optimum. Lower durability of goods reduces the incentive to steal those goods, thus reducing crime. When crime is included in the standard framework of durable goods, the socially optimal durability level is lower. When considering different stealing technologies, perfect competition either over-produces durability or produces zero (minimum) durability. The monopolist under-produces durability. The model has a clear policy implication: the durability of goods, and the market structure for those goods, can be an effective instrument to reduce crime. In particular, making the durability of a good contingent upon that good being stolen is likely to increase welfare. We also study the incentives to develop and use this optimal technology.

Suggested Citation

  • Galiani, Sebastian & Jaitman, Laura & Weinschelbaum, Federico, 2020. "Crime and durable goods," Journal of Economic Behavior & Organization, Elsevier, vol. 173(C), pages 146-163.
  • Handle: RePEc:eee:jeborg:v:173:y:2020:i:c:p:146-163
    DOI: 10.1016/j.jebo.2020.02.005
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    Cited by:

    1. Lasso de la Vega, Casilda & Volij, Oscar & Weinschelbaum, Federico, 2021. "Theft in equilibrium," European Economic Review, Elsevier, vol. 139(C).
    2. Laura Jaitman, 2019. "Frontiers in the economics of crime: lessons for Latin America and the Caribbean," Latin American Economic Review, Springer;Centro de Investigaciòn y Docencia Económica (CIDE), vol. 28(1), pages 1-36, December.
    3. Buonanno, Paolo & Vargas, Juan F., 2019. "Inequality, crime, and the long run legacy of slavery," Journal of Economic Behavior & Organization, Elsevier, vol. 159(C), pages 539-552.

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    More about this item

    Keywords

    Crime; Theft; Durability; Perfect competition; Monopoly; Externality; Social optimum;
    All these keywords.

    JEL classification:

    • K00 - Law and Economics - - General - - - General (including Data Sources and Description)
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • D40 - Microeconomics - - Market Structure, Pricing, and Design - - - General
    • D62 - Microeconomics - - Welfare Economics - - - Externalities

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