Inter-American Development Bank
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Washington, DC 20577
Institutional Affiliation: Inter-American Development Bank
NBER Working Papers and Publications
|October 2016||Crime and Durable Goods|
with Sebastian Galiani, Federico Weinschelbaum: w22788
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...