TITLE:
Theft and Welfare in General Equilibrium: A Theoretical Note
AUTHORS:
Thomas Randolph Beard, George S. Ford, Liliana V. Stern, Michael L. Stern
KEYWORDS:
General Equilibrium; Theft; Efficiency
JOURNAL NAME:
Theoretical Economics Letters,
Vol.2 No.5,
December
27,
2012
ABSTRACT: We show that in a dynamic general equilibrium model theft lowers social welfare even if it is costless to steal, there is no theft prevention cost, and all stolen goods are immediately returned to society. Theft lowers social welfare because it distorts the investment decision, resulting in undercapitalization and a lower steady-state level of capital. This sheds a new light on the literature originated by Tullock [1].