Abstract
We provide a necessary and sufficient condition on the equilibrium of a Walrasian economy for an increase in police expenditure to induce an increase in crime. It turns out that this is essentially the condition for the Laffer curve to be downward sloping at a given ad valorem tax rate. Notably, such a perverse effect of police on crime is consistent with any appropriation technology and could arise even if the level of police protection is the socially optimal one.
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We are grateful to Rafael Di Tella, Sebastian Galiani, Naomi Gershoni, Andrés Neumeyer, Ignacio Palacios-Huerta, two anonymous referees and the associate editor for useful comments. This research was supported by the Israel Science Foundation (research Grant 962/19). Lasso de la Vega and Volij also thank the Spanish Ministerio de Economía y Competitividad (Project PID2019-107539GB-I00) and the Gobierno Vasco (Project IT1697-22) for research support. An earlier version of this paper circulated under the title “Can more police induce more crime?”
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Lasso de la Vega, C., Volij, O. & Weinschelbaum, F. When do more police induce more crime?. Econ Theory 76, 759–778 (2023). https://doi.org/10.1007/s00199-022-01477-7
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DOI: https://doi.org/10.1007/s00199-022-01477-7