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Property Crime with Private Protection: A Market-for-Offenses Approach

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  • Louis Hotte

    () (Department of Economics, University of Ottawa)

  • Fabrice Valognes

    () (Department of Economics and Mathematics, University of Le Havre)

  • Tanguy van Ypersele

    () (Université de Aix-Marseille 2)

Abstract

We analyze property crime in an endowment economy composed of a large number of heterogeneous individuals who need to protect themselves, choose whether to participate in crime or not, and decide on how to allocate their predation efforts across victims. The equilibrium posits perfect foresight by all and the crime payoff clears the market between victims’ losses and criminals’ gains. We obtain that the crime payoff summarizes all the relevant information concerning the state of the crime environment as far as individual welfare is concerned. The burden of crime, expressed as losses relative to initial wealth, is evenly distributed between rich and poor individuals, inclusive of the protection effort. In absolute terms, the rich spend more on protection and lose more from crime. We derive a necessary and sufficient under which wealth redistribution increases crime. Under a weak sufficient condition, economic development tends to reduce the burden of crime for all, regardless of how its fruits are distributed. The predictions of the model accord well with existing empirical results

Suggested Citation

  • Louis Hotte & Fabrice Valognes & Tanguy van Ypersele, 2009. "Property Crime with Private Protection: A Market-for-Offenses Approach," Working Papers 0901E, University of Ottawa, Department of Economics.
    • Handle: RePEc:ott:wpaper:0901e
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    File URL: http://sciencessociales.uottawa.ca/economics/sites/socialsciences.uottawa.ca.economics/files/0702E-old.pdf
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    References listed on IDEAS

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    Cited by:

    1. Baumann, Florian & Friehe, Tim, 2013. "Private protection against crime when property value is private information," International Review of Law and Economics, Elsevier, vol. 35(C), pages 73-79.

    More about this item

    Keywords

    Private Protection; Economic Development; Inequality;

    JEL classification:

    • D63 - Microeconomics - - Welfare Economics - - - Equity, Justice, Inequality, and Other Normative Criteria and Measurement
    • D74 - Microeconomics - - Analysis of Collective Decision-Making - - - Conflict; Conflict Resolution; Alliances; Revolutions
    • K42 - Law and Economics - - Legal Procedure, the Legal System, and Illegal Behavior - - - Illegal Behavior and the Enforcement of Law
    • O17 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements

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