Property crime with private protection: A market-for-offenses approach

Louis Hotte, Department of Economics, University de Namur

We analyse property crime in an economy composed of a large number of heterogeneous individuals who need to protect themselves.
The crime equilibrium is modeled as a
free-access equilibrium in which the match between criminals and
victims equates the average returns to crime. The supply and toleration
for crime are endogenized taking into account incentives to
participate in criminal activities and individual protection
decisions. We first observe that individual welfare
is positively affected by the
gross returns to crime. We then obtain that the share of wealth
lost to crime and spent on private protection is the same for all
individuals, regardless of their initial wealth. And although economic growth has ambiguous effects on the crime rate and the aggregate value of stolen goods, it unambiguously improves the welfare of all, regardless of how the fruits from growth are spread among the population. Finally, we argue that whether redistribution or public enforcement is more effective in reducing crime depends crucially on how well one can target a certain group of individuals.

Date: 11 November-00 0000