Edited by Bruce L. Benson and Paul R. Zimmerman
Chapter 1: The Market Model of Crime: A Short Review and New Directions
* Isaac Ehrlich INTRODUCTION Historically, the literature on the association between the law, including legal infractions, and the economy was confined to the impact of the legal and regulatory systems on economic activity. Milestones have been the works of Ronald Coase and the mentoring of Aaron Director. Laws and regulations and the degree of their enforcement were taken by and large to be exogenous to the economic system. The modern literature on the economics of crime, which had its origins in the early 1960s, when the level of criminal activity rose significantly to attract serious academic attention by economists (and more generally, the ‘law and economics’ movement that followed it), brought a new dimension to the literature by proposing that the incidence of crime as well as the degrees to which laws and regulations are enforced can themselves be treated as endogenous outcomes of rational choices on the part of individuals and law enforcement agencies. Early contributions were made by Fleisher (1966) and Rottenberg (1968). A key turning point was Gary Becker’s (1968) seminal work on crime and punishment, and the NBER Law and Economics project of the late 1960s and 1970s, in which I had the privilege to play a part. Becker’s work focused on the optimal enforcement of laws, and the use of optimal sanctions to deter crime. My contribution was the modeling of the ‘supply of offenses’ and its linkage to the law enforcement system, in an attempt to explain diversity in the incidence of crimes of different...
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