Dismantling a market for stolen goods: Evidence from the regulation of junkyards in Brazil

Andre Mancha

Journal of Development Economics, 2025, vol. 175, issue C

Abstract: This paper investigates the impact of monitoring and market regulation on the illicit market for stolen goods, focusing on the association between junkyards and auto theft. I explore the effects of a state-level regulation implemented in São Paulo in 2014, which enhanced supervision of the market for auto parts. I find an 8.11% decline in auto theft for municipalities presenting at least one junkyard specialized in auto parts compared to the control group. Additionally, I provide evidence of a meaningful decrease in vehicle insurance prices, suggesting tangible economic benefits for citizens as a result of lower crime rates. These findings offer crucial insights into market regulation as a crime deterrence strategy to reduce the trade of stolen goods, highlighting its complementarity with traditional public security policies.

Keywords: Economics of crime; Law economics; Illegal markets (search for similar items in EconPapers)
JEL-codes: C23 D04 K40 K42 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:deveco:v:175:y:2025:i:c:s0304387825000483

DOI: 10.1016/j.jdeveco.2025.103497

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