Breaking the Law When Others Do: A Model of Law Enforcement with Neighborhood Externalities

30 Pages Posted: 22 Jan 2007 Last revised: 18 Nov 2008

See all articles by Rosa Ferrer

Rosa Ferrer

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences; Barcelona Graduate School of Economics (Barcelona GSE)

Date Written: October 2008

Abstract

A standard assumption in the economics of law enforcement is that the probability of a violator being punished depends only on the resources devoted to enforcement. However, it is often true that the productivity of enforcement resources decreases with the number of violators. In this paper, an individual who violates the law provides a positive externality for other offenders because the probability of being punished decreases with the number of individuals violating the law. This externality explains the existence of correlation between individuals' decisions to break a law. The model evaluates the implications when determining the socially optimal enforcement expenditure, focusing specifically on the case of neighborhood crime. In particular, using a parametrized functional form, I show that neighborhood externalities will enhance or impede enforcement, depending on the crime rate.

Keywords: economics of law enforcement, crime, externalities, social interactions

JEL Classification: K14, K42

Suggested Citation

Ferrer, Rosa, Breaking the Law When Others Do: A Model of Law Enforcement with Neighborhood Externalities (October 2008). Available at SSRN: https://ssrn.com/abstract=958630 or http://dx.doi.org/10.2139/ssrn.958630

Rosa Ferrer (Contact Author)

Universitat Pompeu Fabra - Faculty of Economic and Business Sciences ( email )

Ramon Trias Fargas 25-27
Barcelona, 08005
Spain

Barcelona Graduate School of Economics (Barcelona GSE) ( email )

Ramon Trias Fargas, 25-27
Barcelona, Barcelona 08005
Spain

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