Solution Manual For Economics of Crime and Enforcement Anthony Second Edition, 2025 By M. Yezer Answers to Problems and Exercises Chapter 1: Problems and Exercises 1. In rural areas, individuals can set out targets in the back of their homes and shoot at them with a rifle or pistol without violating any criminal statutes. However, they have civil liability for any damage done to property of others. In cities and suburbs, it is generally a violation of criminal law to discharge a firearm on your own private property even if the weapon is pointed straight down into the ground and can do no damage. Is there an economic rationale for the disparity of treatment of firearms between rural and urban areas? Discharging a firearm in an urban or suburban area creates far larger externalities than the same action in a rural area. Greater population density means that more individuals hear and are potentially harmed by a gun shot. In rural areas, there are large tracts of land where and individual may shoot without endangering anyone who is not on that individual’s private property. Just as the externality rises with population density, so does the likelihood that discharge of a weapon will be regarded as a violation of criminal law. This is consistent with analysis of the economics of criminalization. 2. Gambling on table games such as craps, blackjack, and roulette is legal in some places and illegal under the criminal law in others. What economic arguments would be made by an economist to support legalization? What are the critical economic issues that need to be evaluated in order to support or reject criminalization of table stakes gambling? Economists would begin with the observation that gambling generally involves the voluntary interaction of private individuals. The gambling contract can be enforced under the civil law in the same manner as other contracts. There is a limited literature in economics about neighborhood externalities associated with casinos due to the behavior of patrons. This could be the object of economic research and properly addressed with zoning regulations. The externalities associated with gambling when it is made illegal could be the object of economic research. 3. Clubs and fraternities sometimes have “hazing” ceremonies in which individuals go through an initiation that involves paddling, and other forms of rough physical treatment in which may result in injuries. What economic arguments would support legalization of such hazing? What are the critical economic issues that need to be evaluated in order to support or reject criminalization of hazing? The economic argument concerns the lack of externalities associated with hazing provided that it is not conducted in public. If potential members are aware of the rough physical treatment when then pledge a fraternity, the subsequent hazing can be considered a matter of contract. This is a critical economic issue because, in some cases, the nature of hazing is not revealed. Indeed the secrecy of the initiation
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process may be part of the attraction of the fraternity. To put hazing in perspective, many colleges sponsor sport teams in rugby, football, wrestling, etc in which the physical abuse of the participants makes fraternity initiation look mild. However, participants in these sports are well aware of the potential for injury and there is no concern over criminalization. 4. Imagine a town named Cannineville in which dogs can be walked by their owners without being on a leash. However, dog owners are liable for damage done by their pets. Now consider what would happen if a law required all dogs to be on a leash and subject violating owners to criminal penalties. How would this change in treatment of dog owners influence the civil law regarding liability for pets? In this case, the criminal law has set a standard of precaution that would be applied in civil cases. Before the criminal law, an individual suffering some harm from a dog who was not on a leash would need to demonstrate that the owner was not exercising reasonable care to control the animal. With the criminal penalties in place, the civil liability is trivial for cases where unleashed dogs do damage. 5. Some countries, such as Germany, have a mixture of highways with no speed limits and other roads with strict limits on vehicle velocity. How might these apparently contradictory rules relate to the externalities of high speed driving that were discussed in this chapter? Whether this is intentional or not, the German system tends to segregate those suffering externalities from other drivers. Those who wish to avoid vehicles traveling at high speed, can avoid highways with no speed limit. There are many cases in which externalities that could prompt criminalization are avoided by such segregation. The nude beach segregates those who enjoy public nudity from those who are repulsed by it.
6. Text Box 1 describes the problem faced in 1877 by owners of the Homestead Mine who had to ship gold from the mine in Lead, South Dakota to the nearest railroad connection in Cheyenne, Wyoming. Assuming there was no government protection for these shipments, draw the supply and demand curves that would characterize the market for robbery if the mine had not taken special measures to protect shipments (i.e. if the gold had been shipped by ordinary stagecoach.) Now modify the diagram to show what should happen if the mine used an iron-clad coach like the Monitor and several armed guards. Compare your answer to what is claimed about robberies in the text box. An ordinary stagecoach would be robbed easily and often, with robbery at R* as shown below. In this case, there is no public enforcement, essentially no law in the area. This means that the Homestead Mine owners had to rely on private protection (we will later call this private displacement effort) to lower the demand for crime curve by fortifying the coach with armor and hiring skilled armed guards. The effect of this is to shift the demand for crime down as shown by the dashed line. At this point, it is below the supply curve and no one attempts to rob the stage.
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Return to gold robbery $
Market for Gold Robbery
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D D’ R* Robberies per month 7. If an intoxicated economics professor drives recklessly in a university-owned parking lot and hits your car, he cannot be charged criminally with driving while intoxicated. But if the professor makes it out of the parking lot and hits you on a city street, the police will charge him with driving while intoxicated (DWI). How would an economist justify the differential treatment of DWI in these two cases? In some jurisdictions, it may be possible to charge the intoxicated professor but an economist would likely appeal to the argument that there is a fundamental difference between driving on private land and a public road. The general use of public facilities and presumption that traffic rules will be followed by all users means that potential externalities from intoxicated driving are much larger on city streets. Therefore behavior that is criminalized on public roads may not be criminalized on private land. Of course, the land owner and damaged driver may take civil action against the economics professor. 8. Criminalizing an activity sometimes disables the civil law. 8a. Give an example of an activity that has been criminalized but where civil actions for damages are still possible. Please indicate who the defendant and plaintiffs are. Victims of robbery, assault, and most other violent crimes may take civil actions as plaintiffs against perpetrators (defendants), who are also subject to criminal prosecution. 8b.. Give an example of an activity that has been criminalized but where civil actions for damages are not possible. Please indicate who the defendant and plaintiffs would be if the activity were not criminalized Victims who purchase substances (drugs) whose sale has been criminalized are not usually entitled to take civil actions against sellers (defendants). The drug sales are subject to criminal prosecution.
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Chapter 2: Problems, Exercises, and Answers 1. What, if any, changes to the model in this chapter would be necessary to apply it to the problem of driving while intoxicated? As is often the case with economic models, only a change in interpretation of the variables is necessary. The reasoning is identical except that driving while intoxicated is not a direct externality. The speeding, swerving and general lack of control associated with intoxication causes the externality. 2. What happens to the decision to criminalize if the Cα+β+X(R) curve is virtually identical to the Cα+β(R) curve? Please provide an intuitive discussion for why the difference in these two curves is so important to the economics of crime. The two curves differ by the amount of the externality imposed on others. This externality is the basis for criminalization. If damages occur only to α and β, civil actions are sufficient to cause α to consider the costs imposed on β. If only the individual directly harmed by α’s actions is β, then civil action against α by β should be sufficient to cause α to consider the effects on β. 3. Consider two cases of bank robbery. One occurs in the central core of a large city where there are many banks and pedestrians. Another occurs in a very isolated town with only one bank, few other businesses, and a small resident population. Assume that both banks had the same cash on hand so that the benefits of the crime (to the offenders) are similar. What are the likely shapes of the cost curves for these two crimes? In which case is it likely that more enforcement effort is warranted based on benefit/cost analysis? Explain your answer. This problem describes a situation in which all of the curves in the benefit/cost diagram are identical except for the externalities, which are much larger in the more populated area which presumably contains more banks that will be led to exercise precaution as well as bank employees and patrons. For those of you who answered that enforcement costs likely differ, this is correct but the nature of the difference is problematic. 4. Overtime parking at meters, i.e. staying in the parking spot after the meter has expired, imposes costs on those seeking to park, perhaps to shop or work. However, metered parking is costly to enforce because, compared to revenue from meters, the cost of meter readers who write tickets is high. This suggests raising the fine for overtime parking from, say, $20 to $200 or even $2,000. What unintended consequences might result from these much higher fines? The purpose of the fines is to insure that revenue is collected for parking in areas where parking is scarce (otherwise no one would use metered spaces). As the fine is set higher, in addition to being more likely to pay, individuals will tend to avoid parking in the area if there is a danger that they could get a ticket. As the fines become very high, the equilibrium level of parking would be one in which, only those confident that they could complete their business before the meter ran out
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would use the spaces and meter readers would patrol without writing tickets. Accordingly, parking revenue might actually fall, ticket revenue would be zero and there would be an added cost of checking meters. 5. Figure 2-3 shows the total benefit, total cost (including externalities), and total enforcement cost, associated with shoplifting, s, in a particular are. B(s) is benefit from different levels of shoplifting s, C(s) cost imposed on victims and others in society, and E(s) is enforcement cost. $/time period 1,400 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 200 100 0 -100 -200 -300 -400 -500 -600
Figure 2-3 C(s)
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5.a. The level of shoplifting that maximizes net benefit to society is __38___ per time period and the net benefit to society is $__0__ per time period.. Please show your method for getting this answer. Consider three arrows at different levels of s. Determine the difference of B(s) less the sum of C(s) and E(s) at each level of s. For example at x = 28, B(s) = E(s) and C(s) ≈ −200 so that N(s) is approximately −200 on the dotted net benefit curve. 5b. Why is E(s) = 0 when s = 90? The benefit curve is flat at this point which indicates that offending will not increase further even if enforcement cost is zero. 5c. What is included in the B(s) curve? Generally benefits are returns to the individual(s) who are responsible for activity. To noneconomists counting benefits to these individuals may seem strange but recall that they are only considered “offenders” in the sense that their activity is imposing costs on others.
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