Crime%20and%20Durable%20Goods

Discussion Papers

Crime and Durable Goods


CODE: IDB-DP-541
AUTHOR(s): Galiani, Sebastian , Jaitman, Laura , Weinschelbaum, Federico
PUBLISHED: September 2017
LANGUAGE: English
RELATED TOPICS: Microeconomics
DOWNLOAD FILE IN: English

Abstract:

Crime and the durability of goods are strongly connected issues. However, surprisingly, they have been studied separately. This paper explores the relationship between the production of durable goods and crime from a theoretical perspective and draws important conclusions for both topics. Crime affects the consumer and producer surplus and thus the behavior of consumers, firms, the 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. Even without considering the negative non-market externalities of crime, perfect competition does not provide the optimal durability level. When considering different stealing technologies, perfect competition either over-produces durability or produces zero (minimum) durability. The monopolist under-produces durability regardless of the stealing technology considered. If all the crime externalities are taken into account, the socially optimal durability level is reduced further and gets closer to that which prevails under monopoly. 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.

Related Research by JEL Codes:
(or click here to find research by JEL Codes)
  • Do Rewards Work? Evidence from the Randomization of Public Works
    Working Papers
    IDB-WP-794 - April 2017

    This paper evaluates the effect of positive inducements on tax behavior by exploiting a natural experiment in which a municipality of Argentina randomly selected 400 individuals among more than 72,000 taxpayers who had complied with payment of their property tax. These individuals were publicly recognized and awarded the construction of a sidewalk. Results indicate that: i) being selected in ... (View publication)

  • The Unintended Consequences on Crime of “Pennies from Heaven”
    Working Papers
    IDB-WP-666 - February 2016

    This paper examines how an infrastructure investment policy, implemented nationwide at the local level, has affected local crime rates. This policy, developed in the wake of the global recession of 2008–09, was designed to boost local economies through job creation. Using monthly figures from the Spanish region of Catalonia’s more than 900 municipalities, the paper exploits geographic and tim ... (View publication)

  • Mitigation of Local Pollution and Climate Change in Latin America and the Caribbean: Costs and Synergies
    Technical Notes
    IDB-TN-616 - May 2014

    The overall purpose of this study is to analyze the synergies of environmental mitigation initiatives in practice, based on the approach proposed by Muller and Mendelsohn (2011). According to this methodology, externalities associated with local pollutants are measured using the impact pathway approach. The main local benefits to be derived from applying mitigation measures are the impacts on heal ... (View publication)

Hello, Welcome to the IDB!

Please join our mailing list by simply entering your email below.