The market for offences and the public enforcement of laws: an equilibrium analysis

The general proposition developed in this paper is that the frequency of offences of specific types is determined, by and large, not as the capricious outcome of biological or social idiosyncracies, but as the result of the equilibrating interplay of systematic 'supply and demand' forces. The role of public intervention via police, courts, correctional institutions, and economic policy in general, is then viewed in terms of its impact on the equilibrium level of activity in illegitimate markets, rather than in terms of its effect on either the supply or the demand sides of these markets separately. From a policy perspective the implication is that the efficacy of public intervention in the 'business of crime' must be assessed through the relevant comparative statics or dynamics of market equilibrium, rather than by reference to partial settings. For example, one would seek to know not just whether a rehabilitative project can enhance the likelihood that a group of known offenders will be successfully absorbed in legitimate or socially desirable pursuits, but whether the rehabilitative project, even if successful, would lead to a corresponding reduction in the overall volume of crime. Recognition of the existence and role of the 'market for offences' is shown to lead to important modifications in previous economic analyses of illegitimate activities concerning not only the efficacy of rehabilitation and other means of direct control of individual offenders, but of means of general deterrence as well. The paper states conditions under which individual control is efficacious and shows that it will be ineffective precisely whereas general deterrence is effective. Generally, the relatively efficacy of all means of public enforcement of laws is shown to be a function of both supply and demand elasticities rather than a function of supply elasticities alone. The analysis includes a brief discussion of what is meant by the supply and demand notions is crime, and, indeed, by the more provocative concept of the 'market for offences'.