Deterrence and Displacement in Auto Theft

Marco Gonzalez-Navarro

No 1098, Working Papers from Princeton University, Department of Economics, Center for Economic Policy Studies.

Abstract: Lojack is a stolen vehicle tracking technology that achieves extremely high recovery rates. Ayres and Levitt (1998) show that introduction of the system produced large reductions in vehicle thefts in areas where it was implemented in the United States. The reduced theft risk was shared by all vehicle owners, not only those who bought Lojack. This paper, in contrast, uses the introduction of Lojack to a publicly known set of Ford car models in some Mexican states to show that Lojack generates negative externalities if thieves can distinguish between Lojack and non-Lojack-equipped cars. The empirical analysis suggests that, although Lojack-equipped vehicles experienced a reduction in theft risk of 55%, most of the averted thefts were replaced by thefts of non-Lojack-equipped automobiles in neighboring states. The increase in thefts in non Lojack-serviced states was especially strong for the same car models that in Lojack-serviced states were sold equipped with Lojack.

Keywords: automobiles; United States (search for similar items in EconPapers)
JEL-codes: H23 K42 (search for similar items in EconPapers)
Date: 2008-10
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:pri:cepsud:177

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