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Economies of scale and market power in policing


  • Lawrence Southwick

    (School of Management, University at Buffalo, Buffalo, NY 14260, USA)


The objective of this paper is to use a simultaneous equations method for estimating police production and demand to determine whether or not there are economies of scale in policing. In addition, the effect of market power on productivity, using the Herfindahl-Hirschmann Index, is to be measured. The estimation yields the result that there are diseconomies of scale with respect to the amount of crime beyond about 22 000 people in the policing jurisdiction and diseconomies of scale in numbers of police beyond about 36 000 people. Efficiency is also reduced where there is greater market power. This is conjectured to be the public sector equivalent of taking market power profits. Copyright © 2005 John Wiley & Sons, Ltd.

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  • Lawrence Southwick, 2005. "Economies of scale and market power in policing," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 26(8), pages 461-473.
  • Handle: RePEc:wly:mgtdec:v:26:y:2005:i:8:p:461-473 DOI: 10.1002/mde.1230

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    References listed on IDEAS

    1. Paul Wyckoff, 1988. "Bureaucracy and the ‘publicness’ of local public goods," Public Choice, Springer, vol. 56(3), pages 271-284, March.
    2. Leigh Drake & Richard Simper, 2002. "X-efficiency and scale economies in policing: a comparative study using the distribution free approach and DEA," Applied Economics, Taylor & Francis Journals, vol. 34(15), pages 1859-1870.
    3. Nadeem Burney, 1998. "Economies of scale and utilization in electricity generation in Kuwait," Applied Economics, Taylor & Francis Journals, vol. 30(6), pages 815-819.
    4. Viscusi, W Kip, 1986. "The Risks and Rewards of Criminal Activity: A Comprehensive Test of Criminal Deterrence," Journal of Labor Economics, University of Chicago Press, vol. 4(3), pages 317-340, July.
    5. James Giordano, 1997. "Returns to scale and market concentration among the largest survivors of deregulation in the US trucking industry," Applied Economics, Taylor & Francis Journals, vol. 29(1), pages 101-110.
    6. Gyimah-Brempong, Kwabena, 1987. "Economies of Scale in Municipal Police Departments: The Case of Florida," The Review of Economics and Statistics, MIT Press, vol. 69(2), pages 352-356, May.
    7. E. Tylor Claggett & Gary D. Ferrier, 1998. "The efficiency of TVA power distributors," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 19(6), pages 365-376.
    8. David S Saal & David Parker, 2000. "The impact of privatization and regulation on the water and sewerage industry in England and Wales: a translog cost function model," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 21(6), pages 253-268.
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