Working Paper: NBER ID: w22788
Authors: Sebastian Galiani; Laura Jaitman; Federico Weinschelbaum
Abstract: We develop a theoretical model to study how changes in the durability of the goods affects 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; Durable Goods; Economic Incentives
JEL Codes: K00; K40
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| lower durability of goods (L68) | overall crime rate (K42) |
| crime (K42) | underproduction of durability in monopolistic settings (L15) |
| crime (K42) | overproduction of durability in perfectly competitive markets (D41) |
| durability of goods contingent upon theft (L68) | crime (K42) |
| crime (K42) | consumer surplus (D46) |
| crime (K42) | producer surplus (D22) |
| crime (K42) | traditional results concerning durable goods (L68) |