prices policing and policy the dynamics of crime booms and busts in many historical episodes criminal activity displays booms and busts one clear example is the case of metal crime in the uk and elsewhere where in the face of big increases in value driven by world commodity prices thefts rose very sharply in the 2000s after which they fell this paper studies the respective roles of prices policing and policy in shaping this crime boom and bust separate study of each reveals metal crime being driven up via sizeable and significant metal crime price elasticities and driven down by changes in policing and policy a regression based decomposition analysis confirms that all three of the hypothesised factors considered in the paper prices policing and policy were empirically important in the different stages of metal theft s boom and bust

sales and collusion in a market with storage sales are a widespread and well known phenomenon documented in several product markets this paper presents a novel rationale for sales that does not rely on consumer heterogeneity or on any form of randomness to explain such periodic price fluctuations the analysis is carried out in the context of a simple repeated price competition model and establishes that firms must periodically reduce prices in order to sustain collusion when goods are storable and the market is large the largest equilibrium profits are characterized at any market size a trade off between the size of the industry and its profits arises sales foster collusion by magnifying the inter temporal links in consumers decisions

strategic interaction across countries and multinational agglomeration an application to the cement industry agglomeration in foreign direct investment fdi is typically attributed to location specific characteristics such as natural resource advantages or production related spillovers between multinational firms the increasing collocation of the largest global firms in the cement industry since the 1980s is not easily attributed to either of these explanations this paper draws on theories of multimarket contact to test whether strategic interaction across national markets has influenced the successive market entry decisions generating the observed agglomeration we first establish that there is indeed nonrandom agglomeration of the six largest cement firms we next show that preexisting cross market interaction with current incumbents helps predict which firm will enter a given market and also the choice of market a given firm enters the association does not appear to be caused by strategic convergence or mimicry of recent entry events and cannot be explained by production side effects which depend only on

measuring positive externalities from unobservable victim precaution an empirical analysis of lojack lojack is a hidden radio transmitter device used for retrieving stolen vehicles because there is no external indication that lojack has been installed it does not directly affect the likelihood that a protected car will be stolen there may however be positive externalities due to general deterrence we find that the availability of lojack is associated with a sharp fall in auto theft rates of other crime do not change appreciably at least historically the marginal social benefit of an additional unit of lojack has been fifteen times greater than the marginal social cost in high crime areas those who install lojack however obtain less than 10 percent of the total social benefits leading to underprovision by the market

fiscal shenanigans targeted federal health care funds and patient mortality we explore the effectiveness of matching grants when lower levels of government can expropriate some of the funds for other uses using data on the medicaid disproportionate share program we identify states that were most able to expropriate funds payments to public hospitals in these states were systematically diverted and had no significant impact on patient mortality payments that were not expropriated were associated with significant declines in patient mortality overall subsidies were an effective mechanism for improving outcomes for the poor but the impact was limited by the ability of state and local governments to divert the targeted funds

male unemployment and crime in england and wales this paper employs county level data to investigate the relationship between crime and male adult and youth unemployment in britain our results indicate that there is a systematic positive relationship between most crime and male unemployment regardless of age

endogenous federal grants and crowd out of state government spending theory and evidence from the federal highway aid program contrary to simple theoretical predictions existing evidence suggests that federal grants do not crowd out state government spending a legislative bargaining model with endogenous grants documents a positive correlation between grant receipts and preferences for public goods this correlation has likely biased existing work against measuring crowd out to correct for such endogeneity the model motivates instruments based on the political power of state congressional delegations exploiting this exogenous variation in grants the instrumental variables estimator reports crowd out that is statistically and economically significant this endogeneity may explain the flypaper effect a nonequivalence between grant receipts and private income jel d70 h40 h77

cops and crime abstract the violent crime control and law enforcement act of 1994 established the community oriented policing services cops program that provided grants to states and localities to pay up to 75 of the cost for new police hires for 3 years to date the cops program has awarded almost 5 billion in hiring grants paying for 64 000 new police officers we use annual data from 1990 through 2001 from 2074 cities with populations in excess of 10 000 to show that for each officer paid for by grant funds the size of the force expands by 0 70 officers the size of cops grants are correlated with population and crime rates but not the pre cops time trends in crime rates or the size of the police force this allows us to use the size of cops grants as an instrument for the size of the police force in regressions where crime is the outcome of interest these models indicate that police added to the force by cops generated statistically significant reductions in auto thefts burglaries robberies and aggravated assaults

the economics of crime and punishment an analysis of optimal penalty this paper demonstrates the optimality of a non maximal penalty in a hierarchical enforcement structure the penalty is chosen by the social planner to maximize the probability of monitoring and to minimize the probability of transgression we compare the optimal penalty levels with and without ex post flexibility wherein the players are allowed to alter their decision after they observe the social planner s choice 2000 elsevier science s a all rights reserved

using electoral cycles in police hiring to estimate the effect of police on crime comment previous empirical studies have uncovered little evidence that police reduce crime possibly due to simultaneity problems this paper uses the timing of mayoral and gubernatorial elections as an instrumental variable to identify a causal effect of police on crime increases in the size of police forces are shown to be disproportionately concentrated in mayoral and gubernatorial election years increases in police are shown to substantially reduce violent crime but have a smaller impact on property crime the null hypothesis that the marginal social benefit of reduced crime equals the costs of hiring additional police cannot be rejected

is the wto passe the wto has delivered policy outcomes that are very different from those likely to emerge out of the recent wave of preferential trade agreements ptas should economists see this as an efficient institutional hand off where the wto has carried trade liberalization as far as it can manage and is now passing the baton to ptas to finish the job this paper surveys a growing economics literature on international trade agreements and argues on this basis that the wto is not passe rather and subject to some caveats this survey of research to date suggests that the wto warrants strong support while a more cautious view of ptas seems appropriate

burglary and income inequality abstract in a model where risk neutral agents have differing legal incomes which may be supplemented by burglary we study the effects of income distribution on the level of burglary assuming that a detected burglar is incarcerated for a fixed term and assuming that burglars choose target houses using the signal of house quality we show how increases in income inequality may increase the level of crime in particular increases in relative differential inequality unambiguously increase burglary crime corollaries are that a more regressive income tax increases the level of crime and that richer neighborhoods may have lower crime rates

time varying discrete monetary policy reaction functions a novel dynamic ordered probit model with time varying parameters is proposed to estimate a monetary policy reaction function with narrative based monetary indicators the estimation and inference are carried out using the bayesian simulation based approach empirically these are the following findings first there is strong evidence in support that the central bank in taiwan responds counter cyclically to inflation but weaker if any evidence to economic growth secondly the persistence and consistence in policy making of the monetary authority is confirmed by the significance of the positive autoregressive coefficient although not all the estimates of the tvp dop model provide at least partial support of time varying parameters finally the results indicate that studies of the discrete monetary policy reaction functions without explicitly considering the possible dynamics inherent in the time series data and time variations in model parameters may be inappropriate if not incorrect

thinking fast and slow some field experiments to reduce crime and dropout in chicago we present the results of three large scale randomized controlled trials rcts carried out in chicago testing interventions to reduce crime and dropout by changing the decision making of economically disadvantaged youth we study a program called becoming a man bam developed by the nonprofit youth guidance in two rcts implemented in 2009 2010 and 2013 2015 in the two studies participation in the program reduced total arrests during the intervention period by 28 35 reduced violent crime arrests by 45 50 improved school engagement and in the first study where we have follow up data increased graduation rates by 12 19 the third rct tested a program with partially overlapping components carried out in the cook county juvenile temporary detention center jtdc which reduced readmission rates to the facility by 21 these large behavioral responses combined with modest program costs imply benefit cost ratios for these interventions from 5 to 1 up to 30 to 1 or more our data on mechanisms are not ideal but we find no positive evidence that these effects are due to changes in emotional intelligence or social skills self control or grit or a generic mentoring effect we find suggestive support for the hypothesis that the programs work by helping youth slow down and reflect on whether their automatic thoughts and behaviors are well suited to the situation they are in or whether the situation could be construed differently jel codes c91 c93 d03 d1 i24 i3 i32 k42

the flypaper effect what happens to a state s spending when it receives an unconditional grant from the federal government the standard theoretical analysis predicts that the increase in spending will be the same as that generated by an equivalent increase in local incomes or roughly 5 10 percent for most states in contrast numerous empirical analyses have found that spending increases by much more with some estimates near 100 percent this result is known as the flypaper effect since the money appears to stick where it hits the authors review this evidence as well as other studies that find similar behavior in firms

intraplay communication in repeated games the paper examines repeated games where players have the possibly costly option of initiating bargaining over continuation payoffs between plays of the stage game a solution concept for these augmented games renegotiation perfectness is used to characterize concepts like subgame perfectness and pareto perfectness in the underlying repeated game and to extend pareto perfectness to infinite horizon games when bargaining is costly renegotiation may be indispensable off the equilibrium path for supporting renegotiation perfect outcomes sufficient conditions for a renegotiation perfect profile to support payoffs which are not supported by and not dominated by some subgame perfect profile are developed in the infinite horizon case journal of economic literature classification number c70

the dynamics of multimarket competition in exploration and exploitation activities prior studies of multimarket contact have investigated exploitation rather than exploration activities we contrast effects of multimarket contact on entry and exit dynamics in these two settin

trade policy cross border externalities and lobbies do linked agreements enforce more cooperative outcomes abstract we analyze whether linking international cooperation in trade policy to environmental policy or other issues with nonpecuniary externalities promotes more cooperation in both policies or whether cooperation in one is strengthened at the expense of the other in the context of self enforcing agreements we show that if the policies are independent in the government s objective function then linkage promotes cooperation in one policy at the expense of the policy that is easier to enforce under no linkage however if the linked policies are not independent and if these policies are strategic complements then linkage can sustain more cooperation in both issues than no linkage the policies are strategic complements only if i the production externality has cross border effects ii the weight on the externality cost is high iii import competing lobbies are not powerful

do meetings in smoke filled rooms facilitate collusion the sherman act prohibits firms from discussing prices in meetings traditional thought suggests that this prohibition makes it harder for firms to collude and economists have concluded that the sherman act operates in the public interest i provide an alternative explanation for the act that also accounts for the small sanctions chosen by the legislature when firms interact in a dynamic environment in which the law helps them to prevent renegotiation the firms may benefit from the law that makes it costly but not very costly to meet to discuss prices the sherman act may help firms to collude

local natural resources and crime evidence from oil price fluctuations in texas abstract we exploit plausibly exogenous changes in the value of reserves in texas s giant oil fields to determine the impact of crime in texas counties that have reserves texas provides an ideal setting for this research strategy first texas has the largest number of giant oil fields second texas s giant oil fields possess the greatest remaining oil potential third giant oil fields are dispersed throughout the state we find that a 1 increase in the value of oil reserves increases murder by 0 16 robbery by 0 55 and larceny by 0 18 using the estimated elasticities an average increase in the value of oil reserves 26 increase in the value of reserves results in a 4 15 increase in murder rates 8 increase in robbery and 4 7 increase in larceny these effects are not trivial we explore potential mechanisms that could be driving this increase in crime and find that an increase in the value of local oil reserves improves the local economic conditions increases the share of young males and increases the share of individuals residing in group quarters e g temporary worker housing of its county with no effect on the local economic conditions demographic changes or crime rates of adjacent counties

reexamining criminal behavior the importance of omitted variable bias to what extent do changes in the expected penalty alter the willingness of individuals to engage in illegal activity becker 1968 developed a theoretical model of criminal behavior that asserted offenders respond to incentives in much the same way as those who engage in legal activities respond ehrlich 1973 pioneered empirical tests of the model and concluded that there was a strong positive correlation between income inequality and property crimes that the crime rate was positively related to relative gains and negatively related to the costs associated with criminal activity and that law enforcement activity had a deterrent effect for all crimes recently many papers have used arrest rates to mea

ambiguity in criminal punishment abstract there has been substantial prior field research on how the incidence of criminal behavior responds to changes in the probability of punishment the results of this research are at best mixed in regards to its conformance to the predictions of standard expected utility theory one possible cause for these mixed results is that punishment probabilities in the field are typically unknown making the choice environment one of ambiguity rather than uncertainty the presence of this ambiguity could in part explain some of these conflicting results as a step towards investigating this link we conduct an experiment framed as being on tax compliance intended to try to understand how individuals respond to ambiguous punishment probabilities and in particular to how they respond to shifts in ambiguous versus known probabilities we find that when probabilities are known and shift the standard model works well to explain the response when the probabilities are ambiguous and shift the behavioral response is minimal we also use these experiments as a means of testing whether ambiguity aversion might be present in sufficient degree to be exploitable in how enforcement procedures are advertised to increase their effectiveness at minimal cost we find at best weak evidence in favor of ambiguity aversion and thus little support for the notion that enforcement regimes could take advantage of ambiguity aversion

global cartels leniency programs and international antitrust cooperation in this paper we analyze cartel formation and self reporting incentives when firms operate in several geographical markets and face antitrust enforcement in different jurisdictions we are concerned with the effectiveness of leniency programs and the benefits of international antitrust cooperation between agencies when international antitrust prosecution is uncoordinated multi market contact allows firms to reduce the amount of self reporting in equilibrium and sustain cartels more effectively we then discuss the effects of information sharing among antitrust authorities as a function of how much and which type of information is exchanged we show that extensive information sharing might have an adverse effect on self reporting by cartel members

multi market collusion with demand linkages and antitrust enforcement this paper analyzes dynamic cartel formation and antitrust enforcement when firms operate in demand related markets we show that cartel prosecution can have a knock on effect bringing down a cartel in one market reduces profits and cartel stability and leads to the break up of the cartel in the adjacent market cartel prosecution can also have a waterbed effect disrupting a cartel increases cartel stability in the adjacent market and induces cartel formation in previously competitive markets we discuss the impact of dynamic cartel formation on consumer surplus explore antitrust spillovers the optimal scope of antitrust interventions and cartel formation with local firms

optimal collusion under imperfect monitoring in multimarket contact abstract we investigate optimal collusion in repeated multimarket contact under imperfect public monitoring where two firms operate in m markets and in each market each firm s decision and public signals are binary we show that in an optimal pure strategy strongly symmetric perfect public equilibrium the size of efficiency loss is equal to that in the market with the most tempting deviation under single market contact furthermore we show a sufficient condition under which the symmetric equilibrium is optimal for joint payoff maximization among any perfect public equilibrium

public safety through private action an economic assessment of bids private actions to avoid and prevent criminal victimisation and assist public law enforcement are vital inputs into the crime control process one form of private action the business improvement district bid appears particularly promising a bid is a non profit organisation created by property owners to provide local public goods usually including public safety our analysis of 30 los angeles bids demonstrates that the social benefits of bid expenditures on security are a large multiple about 20 of the private expenditures crime displacement appears minimal crime reduction in the bid areas has been accompanied by a reduction in arrests suggesting further savings given the vital role of private individuals and firms in determining the effectiveness of the criminal justice system and the quality and availability of criminal opportunities private actions arguably deserve a more central role in the analysis of crime and crime prevention policy 1 but the leading scholarly commentaries on the crime drop during the 1990s have largely ignored the role of the private sector blumstein and wallman 2000 levitt 2004 zimring 2007 the potentially relevant trends include growing reporting rates the growing sophistication and use of alarms monitoring equipment and locks the considerable increase in the employment of private security guards and the decline in the use of cash cook and macdonald 2010 private actions can be encouraged or discouraged through regulation of the insurance industry reducing the costs of private co operation with police and courts gun control measures and other means the justification for such measures is the reasonable presumption that many sorts of private action to avoid mitigate and respond to crime generate substantial externalities business improvement districts bids are a particularly promising institution for harnessing private action to cost effective crime control a bid is a non profit organisation created by neighbourhood property owners to provide local public goods including public safety the organisation has the power to tax all the owners in the district including those who did not sign the original petition previous evaluations of bids in los angeles la indicate that they are successful in reducing crime rates brooks 2008 macdonald et al 2009 we provide a further analysis of the costs and benefits including the effect on arrests and spillovers and we estimate a dose response

discrete response state space models with conditional heteroscedasticity an application to forecasting the federal funds rate target we propose a state space mixed model with stochastic volatility for ordinal response time series data for parameter estimation we design an efficient markov chain monte carlo algorithm we illustrate our method with an empirical study on the federal funds rate target the proposed model provides better forecasts than alternative specifications

an empirical study of matching grants the cap on cap abstract funding mechanisms for social expenditures are currently being reformed in many countries while the theoretical implications of these changes are often easily identified their empirical magnitude is not always as clear for example in federal systems social expenditure is often funded by matching grants and estimates of the effect of varying matching rates on expenditures by sub national governments vary widely the ambiguity is due in part to inherent difficulties identifying price and income effects of federal grants given the structure of the funding mechanisms in most countries in this paper we examine a recent reform in canada in which federal grants for welfare expenditures were capped converted from an open ended to a closed ended matching grant importantly the cap applied to only three of 10 provincial governments our empirical strategy exploits the time series cross section variation in the funding mechanism provided by the differential application of the reform this approach potentially surmounts some of the difficulties which have beset earlier studies we find that the affected provinces did respond to the reform by reducing the growth rate of expenditures it was 8 to 9 percentage points lower than predicted in the absence of the cap over the medium term

does limited punishment limit the scope for cross retaliation this paper analyzes two prominent institutional rules in the international trading system a limited cross retaliation rule characterized by the understanding on rules and procedures governing the settlement of disputes dsu article 22 3 and a limited punishment rule characterized by the general agreement on tariffs and trade gatt article xxviii in general both rules are designed to limit the countermeasures upon a violation however the former rule specifies the limits of composition in retaliation whereas the latter one designates the limits of retaliation magnitude we show that albeit seemingly unrelated the limited cross retaliation rule complements the limited punishment rule in permitting greater trade liberalization specifically we show how the limited cross retaliation rule also helps limit the incentives to violate the trade agreement when the limited punishment rule prevails jel f13 k33 c73

multimarket contact and collusive behavior traditional analyses of industrial behavior typically link the exercise of market power in an industry to internalfeatures such as demand conditions concentration and barriers to entry nevertheless some economists have remained concerned that external factors such as contact across markets may also play a significant role in determining the level of competitiveness in any particular industry in this article we examine the effect of multimarket contact on the degree of cooperation that firms can sustain in settings of repeated competition we isolate conditions under which multimarket contact facilitates collusion and show that these collusive gains are achieved through modes of behavior that have been identified in previous empirical studies of multimarketfirms

leniency programs for multimarket firms the effect of amnesty plus on cartel formation we examine the effect of amnesty plus on dynamic cartel formation in a multimarket setting the amnesty plus program has been adopted as part of the us corporate leniency policy in 1999 and is now vigorously advertised as one of the most compelling tools in generating successful cartel investigations amnesty plus is aimed at attracting amnesty applications by encouraging firms convicted in one market to report their collusive agreements in other markets we show that amnesty plus has two opposite effects on firms ability and incentives to collude which are both increasing in the fine reduction granted first amnesty plus can reduce the deterrence of cartel activities by making it easier for firms to sustain multimarket collusion through strategies involving self reporting after a first cartel detection second it can reduce the expected duration of cartels or delay their formation by increasing firms incentives to self report after a first cartel detection

a model for the federal funds rate target this paper is a statistical analysis of the manner in which the federal reserve determines the level of the federal funds rate target one of the most publicized and anticipated economic indicators in the financial world the paper introduces new statistical tools for forecasting a discrete valued time series such as the target and suggests that these methods in conjunction with a focus on the institutional details of how the target is determined can significantly improve on standard vector autoregression forecasts of the effective federal funds rate we further show that the news that the fed has changed the target has statistical content substantially different from the news that the fed failed to make an anticipated target change causing us to challenge some of the conclusions drawn from standard linear var impulse response functions

domestic burglaries and the real price of audio visual goods some time series evidence for britain this paper explores the relationship between the real price of audio visual goods and domestic burglaries using british data our findings suggest that the falling real price of these consumer goods has contributed to a reduction in domestic burglary activity

crime in europe and the united states dissecting the reversal of misfortunes contrary to common perceptions today both property and violent crimes with the exception of homicides are more widespread in europe than in the united states while the opposite was true thirty years ago we label this fact as the reversal of misfortunes we investigate what accounts for the reversal by studying the causal impact of demographic changes incarceration abortion unemployment and immigration on crime for this we use time series data 1970 2008 from seven european countries and the united states we find that the demographic structure of the population and the incarceration rate are important determinants of crime our results suggest that a tougher incarceration policy may be an effective way to contrast crime in europe our analysis does not provide information on how incarceration policy should be made tougher nor does it provide an answer to the question whether such a policy would also be efficient from a cost benefit point of view we leave this to future research paolo buonanno francesco drago roberto galbiati and giulio zanella

trade negotiations domestic policies and the most favored nation clause this paper illustrates how restricting trade instruments to non discrimination links trade agreements to non trade agreements and under certain conditions helps governments further lower tariffs and or domestic standards policies these conditions are i governments objective functions are sufficiently concave with respect to domestic standards policies ii domestic standards are sufficiently valued and iii policies are strategic complements these can then be used as a rationale for restricting safeguard measures to non discrimination ce texte montre comment le fait de restreindre les instruments de politique commerciale a la seule poursuite de liens commerciaux libres de discrimination relie accords commerciaux et non commerciaux et a certaines conditions aide les gouvernements a reduire encore davantage les tarifs douaniers et ou les normes politiques nationales ces conditions sont que i les fonctions objectives soient suffisamment concaves par rapport aux normes politiques nationales ii les normes nationales soient suffisamment valorisees et iii les politiques soient des complements strategiques ces arguments fournissent le rationale pour limiter les mesures de protection a la seule non discrimination

multilateral contracting and the employment relationship this paper studies the structure of the employment relationship in organizations it investigates the trade off firms face between making commitments to their workforce as a whole multilateral relational contracts and making more limited commitments to individuals or smaller groups of employees bilateral relational contracts multilateral contracts bind the firm more strongly to implicit commitments improving motivation but are difficult to adjust in response to changes in the environment bilateral contracts make workforce changes easier to implement the framework helps to explain the use of relative performance evaluation why firms rely on temporary employees and the adoption of two tier workforces

the economic epidemiology of crime economic analysis of infectious diseases emphasizes the self correcting character of epidemics as rising risk of infection causes potential victims to take self protective measures we apply the analysis to crime showing how rational potential victims of crime will take increased self protective measures in response to rising crime rates causing those rates to moderate victim responses to crime can offset public expenditures on crime control this implies that there may be a natural rate of crime that is difficult for the public sector to affect we show that victim responses to crime can impart a cyclical pattern to crime rates and discuss the implications of our analysis for gun control and present empirical evidence concerning the responsiveness of self protective measures to crime rates and the cyclical pattern of those rates

annual bonus schemes and the manipulation of earnings abstract using confidential data of executive specific short term bonus plans we investigate the extent to which executives manipulate earnings to maximize the present value of bonus plan payments as such this paper extends the work of healy 1985 like healy we find evidence consistent with the hypothesis that managers manipulate earnings downwards when their bonuses are at their maximum unlike healy we find no evidence that managers manipulate earnings downwards when earnings are below the minimum necessary to receive any bonus we demonstrate that healy s results at the lower bound are likely to be induced by his methodology

criminals response to changing crime lucre how do criminals respond to changes in the benefit from committing a successful crime this question is relevant for understanding the effectiveness of crime fighting policies that reduce demand for illegal goods disrupt black markets and otherwise eliminate cheaper avenues to illicit gain however the literature has not sufficiently addressed this question partly because finding a reliable measure of crime lucre is difficult using proprietary data on cargo theft i match historical prices of various goods with their thefts and estimate the price elasticity of theft to be 1 225 over a cumulative 7 month horizon jel k42

managed trade with imperfect information central to the general agreement on tariffs and trade gatt agreement signed in 1947 by 23 nations was the reduction of tariffs this had the direct result of bringing down the average ad valorem tariff on industrial goods from over 40 in 1947 to under 4 by the time of the uruguay round in 1995 furthermore following the kennedy round of 1969 the objectives of the gatt and of its successor the world trade organization wto were expanded so as to help bring down nontariff barriers as well remarkably these reductions were achieved in the absence of any external enforcement mechanism intended to punish gatt wto violators commitments were kept only as long as nations continued to view adherence to the agreements as being in their mutual interest 2 it is precisely because the contracting parties of the gatt wto have made it their top priority to reduce trade distortions that the subject of safeguards as an exception to the general rule of liberalizing trade comes into play when governments know they can increase tariffs temporarily in the event of a surge in import volume they agree to negotiate a more substantial tariff reduction during the negotiation stage 3 the move toward special protection is motivated in part by the fact that volatility in trade flows has become a more important source of domestic disruption these special protection policy tools are typically used to limit the rate of import or export expansion from that which would occur in the absence of intervention they are aimed at mitigating the underlining changes in trade flows where the basic insight developed in the literature is consistent with different government objectives to this end corden 1974 has argued that countries rarely initiate protection for the purpose of capturing the terms of trade gains presumably because of the fear of future retaliation by their trading partners countries

structural estimation of a becker ehrlich equilibrium model of crime allocating police across cities to reduce crime we develop a model of crime in which the number of police the crime rate the arrest rate the employment rate and the wage rate are joint outcomes of a subgame perfect nash equilibrium the local government chooses the size of its police force and citizens choose among work home and crime alternatives we estimate the model using metropolitan statistical area msa level data we use the estimated model to examine the effects on crime of targeted federal transfers to local governments to increase police we find that knowledge about unobserved msa specific attributes is critical for the optimal allocation of police across msa s

clustering cooperation and search in social networks the paper discusses the important role of clustering in the evolution of social networks as it affects not only the incentives of players to cooperate but also their ability to search for fresh opportunities depending on the volatility of the environment and the social convention in place we show that network clustering endogenously adapts to achieve and maintain to the extent possible a state of high social connectivity in the long run jel c71 d83 d85

criminal deterrence revisiting the issue with a birth cohort we estimate the general deterrent effect of criminal justice resources on criminal behavior using panel data for a sample representative of young men in u s urban areas our data which combine individual level information on arrests and personal characteristics with aggregate information on criminal justice resources allow us to obtain deterrence measures that reflect theoretical concepts and are of potential policy relevance we find robust evidence of a general deterrent effect flowing from criminal justice particularly police resources the nature of our data also allows us to conduct extensive exogeneity tests and to explore a number of possible third causes for the deterrent effect we find strong evidence that our deterrence variables are exogenous and no evidence that our deterrence result stems from commonly hypothesized third causes copyright 1994 by mit press

crime and economic incentives we explore the role that economic incentives particularly changes in wages at the bottom end of the wage distribution play in determining crime rates we use data on the police force areas of england and wales between 1975 and 1996 and find relative falls in the wages of low wage workers lead to increases in crime we carry out a number of experiments with different wage measures including a wage measure that accounts for the effects of changes in the composition of employment these reinforce the picture of a strong association between the low wage labor market and crime the result that incentives play a central role is reinforced further by the strong impact on crime of deterrence measures and of a measure of the returns to crime

an empirical characterization of the dynamic effects of police spending on violent and property crime the study estimates the dynamic effects of shocks to police expenditures on measures of violent and property crime rates using annual u s state level data for the period 1960 2015 we employ a structural panel var model and achieve identification by imposing the restriction that police spending responds to structural shocks to crime with at least a lag of 1 year results indicate that a shock to police spending leads to a persistent and significant decreases in violent and property crime rates and b significant and persistent negative impacts on crime rates in periods of high crime but little impacts in periods of low crime variance decompositions show that shocks to police spending account for moderate to large proportions of the variability of u s state level crime rates our findings are robust across separate measures of violent and property crime rates as well as to the inclusion of additional variables to the baseline panel var model jel k42

on interdependent supergames multimarket contact concavity and collusion abstract following bernheim and whinston 1990 this paper addresses the effects of multimarket contact on firms ability to collude real world imperfections tend to make firms objective function strictly concave and market supergames interdependent firms payoffs in each market depend on how they are doing in others then multimarket contact always facilitates collusion it may even make collusion sustainable in all markets when otherwise it would not be sustainable in any the effects of conglomeration are discussed multigame contact is shown to facilitate cooperation in supergames other than oligopolies as long as agents objective function is submodular in material payoffs journal of economic literature classification numbers c72 d43 l13 l21

panic on the streets of london police crime and the july 2005 terror attacks in this paper we study the causal impact of police on crime by looking at what happened to crime before and after the terror attacks that hit central london in july 2005 the attacks resulted in a large redeployment of police officers to central london boroughs as compared to outer london in fact police deployment in central london increased by over 30 percent in the six weeks following the july 7 bombings during this time crime fell significantly in central relative to outer london study of the timing of the crime reductions and their magnitude the types of crime which were more likely to be affected and a series of robustness tests looking at possible biases all make us confident that our research approach identifies a causal impact of police on crime implementing an instrumental variable approach shows an elasticity of crime with respect to police of approximately 0 3 so that a 10 percent increase in police activity reduces crime by around 3 percent

the changing returns to crime do criminals respond to prices to what extent does crime follow the pattern of potential gains to illegal activity this article presents evidence on how criminals respond to this key incentive by reporting crime price elasticities estimated from a comprehensive crime dataset containing detailed information on stolen items for london between 2002 and 2012 evidence of significant positive crime price elasticities are shown for a panel of 44 consumer goods and for commodity related goods jewellery fuel and metal crimes the reported evidence indicates that potential gains are a major empirical driver of criminal activity and a crucial part of the economic model of crime the changing structure of goods prices helps to explain over 10 15 of the observed fall in property crime across all goods categories and the majority of the sharp increases in the commodity related goods observed between 2002 and 2012

managerial incentives and collusive behavior abstract i characterize the effects of empirically observed managerial incentives on long run oligopolistic competition when managers have a preference for smooth time paths of profits as revealed by the empirical literature on income smoothing manager led firms can sustain collusive agreements at lower discount factors capped bonus plans and incumbency rents with termination threats make collusion supportable at any discount factor independent of contracts duration when managers have these preferences incentives and demand fluctuates price wars during booms need not occur the most collusive price may then be pro cyclical

multimarket contact competition and pricing in banking abstract in this paper we assess the impact of multimarket contact of banks on their market power by means of a simultaneous equation model in which the divergence of price from marginal cost is a function of multimarket linkages the model is estimated using aggregate data from the italian regions for the years 1997 2009 our results show that multimarket contact is positively and significantly correlated to the market power index and is also connected to both home and non home market concentration the evidence is robust to changes in model specification and multimarket contact measures and supports the idea that firms which have a greater amount of contact are more likely to collude

crime punishment and the market for offenses crime is a subject of intense emotions conflicting ideologies however economists have generally explained it as a reflection of individual choice and equilibrating market forces two major themes of the literature are outlined the evolution of a market model to explain the diversity of crime across time and space and the debate about the usefulness of positive versus negative incentives systematic analyses generally indicate that crime is affected on the margin by both positive and negative incentives there are serious limitations to the effectiveness of incapacitation and rehabilitation and optimal enforcement strategies involve trade offs between narrow efficiency and equity considerations

additional evidence on bonus plans and income management abstract we extend healy 1985 by examining the relation between discretionary accruals and bonus plan bounds for a sample of 102 firms for the 1980 1990 period contrary to healy we find that when earnings before discretionary accruals fall below the lower bound managers select income increasing discretionary accruals and vice versa we believe that our results are more consistent with the income smoothing hypothesis than with healy s bonus hypothesis however mechanical selection bias in portfolio formation cannot be entirely ruled out as an alternative explanation for our results

asymmetric information and the new theory of the firm financial constraints and risk behavior this paper summarizes recent developments in the theory of the firm that have arisen in examining the implications of imperfect information it shows that a wide range of these models have similar implications for the likely reaction of firms to external environmental and policy changes two significant implications are 1 that firms behave as if they are risk averse individuals maximizing a utility function of terminal wealth profitability even when the risks involved are unsystematic and 2 in many circumstances because this utility function is likely to be characterized by decreasing absolute risk aversion firms are likely to respond significantly and positively to changes in cash flow and profitability together these two phenomena are able to account for a wide range of firm behaviors that have been empirically observed both formally and informally and that are difficult to explain in terms of the traditional theory of the firm furthermore the responses of such firms to policy interventions are likely to differ significantly from those of neoclassical firms this abstract was borrowed from another version of this item

terror and the costs of crime abstract this paper argues that terrorism beyond its immediate impact on innocent victims also raises the costs of crime and therefore imposes a negative externality on potential criminals terrorism raises the costs of crime through two channels i by increasing the presence and activity of the police force and ii causing more people to stay at home rather than going out for leisure activities our analysis exploits a panel of 120 fatal terror attacks and all reported crimes for 17 districts throughout israel between 2000 and 2005 after controlling for the fixed effect of each district and for district specific time trends we show that terror attacks reduce property crimes such as burglary auto theft and thefts from cars terror also reduces assaults and aggravated assaults which occur in private homes but increases incidents of trespassing and disrupting the police taken as a whole the results are consistent with a stronger deterrence effect produced by an increased police presence after a terror attack a higher level of policing is likely to catch more people trespassing and at the same time reduce the number of property crimes the decline in crimes committed in private houses is likely an indication that the tendency for individuals to stay home after a terror attack further increases the costs of crime

smoothing income in anticipation of future earnings abstract recent theory argues that concern about job security creates an incentive for managers to smooth earnings in consideration of both current and future relative performance we find support for this theory our evidence suggests that when current earnings are poor and expected future earnings are good managers borrow earnings from the future for use in the current period conversely when current earnings are good and expected future earnings are poor managers save current earnings for possible use in the future however sensitivity analysis indicates that we cannot rule out selection bias as a potential alternative explanation for our findings

an equilibrium approach to international merger policy i treat international merger policy as a repeated veto game i show that there exists a unique efficient equilibrium within a particular class of trigger strategy equilibria i then consider a series of comparative statics and extensions a if for some exogenous reason one of the countries becomes more lenient towards mergers than the other country becomes more lenient as well b merger remedies increase the probability that a merger is approved and increase total welfare c the effects of a merger wave are magnified by the equilibrium approval policy d 2005 elsevier b v all rights reserved jel classification f0 l4

collusion under risk aversion and fixed costs we analyze collusion under demand uncertainty by risk averse cartels that care about the utility derived from profits with sufficient risk aversion and non trivial fixed operating costs it becomes difficult for cartels to collusively restrict output both when demand is low and marginal dollars are highly valued and when demand is high and potential defection profits are high output relative to monopoly levels becomes a u shaped function of demand greater risk aversion or higher fixed operating costs make collusion more difficult to support in recessions but easier to support in booms

an explanation for accounting income smoothing it is widely believed that corporate managers often engage in income smoothing taking actions to dampen fluctuations in their firms publicly reported net income one reason given for this is that managers think that investors pay more for a firm with a smoother income stream see ronen and sadan 1981 while there have been many empirical studies attempting to document whether or not income smoothing actually occurs there has been little exploration of why a manager might rationally want to smooth his firm s income explaining why smoothing might be observed and how it can result in an increased stock price is the focus of this paper in two recent studies lambert 1984 and dye 1988 demonstrate in agency settings that a risk averse manager who is precluded from borrowing and lending in the capital markets has an incentive to smooth his firm s reported income in this paper in contrast it is shown that within a market setting an incentive exists for a manager to smooth income that is independent of either risk aversion or restricted access to capital markets the market setting is also useful in that it allows for the analysis of the effect of income smoothing on stock prices it is shown here that if a manager can choose which of two periods to recognize certain income he may prefer the choice that is expected to

the stochastic volatility in mean model with time varying parameters an application to inflation modeling this article generalizes the popular stochastic volatility in mean model to allow for time varying parameters in the conditional mean the estimation of this extension is nontrival since the volatility appears in both the conditional mean and the conditional variance and its coefficient in the former is time varying we develop an efficient markov chain monte carlo algorithm based on band and sparse matrix algorithms instead of the kalman filter to estimate this more general variant the methodology is illustrated with an application that involves u s u k and germany inflation the estimation results show substantial time variation in the coefficient associated with the volatility highlighting the empirical relevance of the proposed extension moreover in a pseudo out of sample forecasting exercise the proposed variant also forecasts better than various standard benchmarks