Question for help
ItSaulGoodman
Chapter5.pptxChapter 5
The Market for Crime with Victims
Introduction
This chapter shows that the standard S&D model can also be applied to markets for crimes with a victim.
This may be surprising considering that S&D typically investigates scenarios of voluntary exchange between informed buyers and sellers.
The Demand for Crime Curve
The market demand-for-crime curve is a relation between the level of offending and the expected return received by the offender.
The determinants of the expected return from offending are the types of victims available and the choices made by potential victims. In other words, the demand curve is formed based on choices by victims, not offenders.
In the case of larceny, potential victims can take many steps to secure their property so that offenders cannot steal their property.
The Demand for Crime Curve
Why is the demand curve downward sloping?
Potential victims vary in their preferences regarding costly that can be taken to avoid becoming victimized.
Some potential victims have preferences or face costs of avoiding victimization that cause them to exercise little precaution to avoid larceny.
To the extent that offenders can identify differences in potential victims, they concentrated on the easy cases in which the expected return per offense is high, then they turn to those who exercise more precaution.
As offending increases, the most attractive victims are already taken.
The Demand for Crime Curve
Why is the demand curve downward sloping?
As offending increases, victims take greater precaution because the return to precaution increases.
In areas where larceny is rare, security provisions are likely to be lax. But as larceny increases, precaution will also increase. Valuables are locked away, doors have deadbolts, windows may have bars, security systems are installed.
The Market for Crime with Victims
Supply curve reflects choices made by offenders
Factors that shift supply to the right (increase)
Increases in the number of potential offenders
Decreases in the opportunity cost of offenders (Examples: decreases in legal wage, increases in unemployment)
Decreases in the cost of inputs to offending
Advances in technology of offending.
The Market for Crime with Victims
Factors that shift demand to the left (decrease demand)
Greater levels of precaution.
Increases in technology that lower the benefit of crime.
Example: Exploding dye capsules.
The Market for Crime with Victims
As was the case with victimless crime, criminalization and enforcement act like a tax on producers to shift the supply curve to incorporate the cost of the expected sanction.
Practice problems
Show the effect of the following events on the market for larceny
An increase in police officers.
An increase in the legal market wage.
A cheaper, more effective security system is released.
There is a recession causing people to be laid off.
