Criminals and the Price System: Evidence from Czech Metal Thieves
27 Pages Posted: 29 Nov 2014 Last revised: 3 Dec 2014
Date Written: November 1, 2014
This paper estimates the elasticity of the supply of offenses with respect to the gains from crime. People steal copper and other nonferrous metals to sell them to a scrap yard. Simultaneously, the prices at scrap yards are set at the world market. We argue, that shocks in metal prices represent a quasi-experimental variation in gains from crime. This allows us to estimate behavioral parameters of supply of offenses and test the economic theory of criminal behavior. Our estimates suggest that the long-run elasticity of supply of metal thefts with respect to the re-sale value of stolen metal is between unity and 1.5. Moreover, the system tends to equilibriate quickly — between 30 and 60 percent of a disequilibrium is corrected the following month and the monthly price elasticity estimates are between 0.9 and unity.
Keywords: economics of crime, gains from crime, metal theft, rational model
JEL Classification: K42, Q31, Q32
Suggested Citation: Suggested Citation