8. Marginal Deterrence and Crime Cost

Consider a city with 36 workers and three occupations: burglary (b), robbery (r), and plumbing (p). For each occupation, the payoff curve is negatively sloped, and the slopes of the three curves are equal. In the initial equilibrium, b = r = p. Suppose the city increases the penalty for burglary. The new equilibrium number of burglars = 8.

a. Illustrate the equilibrium including values for the number of robbers and plumbers.

b. Predict the effect of the increase in the burglary penalty on the social cost of crime and explain the economic logic of your prediction.

O'Sullivan, Arthur. Urban Economics (p. 400). McGraw-Hill Higher Education. Kindle Edition.