Crime and durable goods

Sebastian Galiani, Laura Jaitman and Federico Weinschelbaum

Journal of Economic Behavior & Organization, 2020, vol. 173, issue C, 146-163

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.

Keywords: Crime; Theft; Durability; Perfect competition; Monopoly; Externality; Social optimum (search for similar items in EconPapers)
JEL-codes: D40 D62 K00 K42 (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Working Paper: Crime and Durable Goods (2018)
Working Paper: Crime and Durable Goods (2016)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jeborg:v:173:y:2020:i:c:p:146-163

DOI: 10.1016/j.jebo.2020.02.005

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