Competition in Law Enforcement and Capital Allocation

CIRPEE Working Paper No. 04-08

25 Pages Posted: 23 Apr 2004

See all articles by Nicolas Marceau

Nicolas Marceau

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE)

Steeve Mongrain

Simon Fraser University (SFU) - Department of Economics

Date Written: April 2004

Abstract

This paper studies interjurisdictional competition in the fight against crime and its impact on occupational choice and the allocation of capital. In a world where capital is mobile, jurisdictions are inhabited by individuals who choose to become workers or criminals. Because the return of the two occupations depends on capital, and because investment in capital in a jurisdiction depends on its crime rate, there is a bi-directional relationship between capital investment and crime which may lead to capital concentration. By investing in costly law enforcement, a jurisdiction makes the choice of becoming a criminal less attractive, which reduces the number of criminals and makes its territory more secure. This increased security increases the attractiveness of the jurisdiction for investors and this can eventually translate into more capital being invested. We characterize the Nash equilibria - some entailing a symmetric outcome, others an asymmetric one - and study their efficiency.

Keywords: Crime, Occupational Choice, Capital, Law Enforcement

JEL Classification: K42

Suggested Citation

Marceau, Nicolas and Mongrain, Steeve, Competition in Law Enforcement and Capital Allocation (April 2004). CIRPEE Working Paper No. 04-08. Available at SSRN: https://ssrn.com/abstract=534502 or http://dx.doi.org/10.2139/ssrn.534502

Nicolas Marceau (Contact Author)

Centre Interuniversitaire sur le Risque, les Politiques Economiques et l'Emploi (CIRPEE) ( email )

Ste-Foy, Quebec G1K 7P4
Canada

Steeve Mongrain

Simon Fraser University (SFU) - Department of Economics ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada
604-291-3547 (Phone)
604-291-5944 (Fax)

HOME PAGE: http://www.sfu.ca/~mongrain/

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