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Crime and Punishment with Habit Formation

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DOI: 10.4236/tel.2011.13021    4,918 Downloads   9,020 Views   Citations

ABSTRACT

Moral concepts affect crime supply. This idea is modelled assuming that illegal activities is habit forming. We introduce habits in an intertemporal general equilibrium framework to illegal activities and compare its outcomes with a model without habit formation. The findings are that habit and crime presents a non linear relationship that hinges upon the level of capital and habit formation. It is possible to show that while the effect of habit on crime is negative for low levels o habit formation it becomes positive as habits goes up. Secondly habit reduces the marginal effect of illegal activities return on crime. Finally, the effect of habit on crime depends positively on the amount of capital. This could explain the relationship between size of cities and illegal activity.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

V. Teles and J. Andrade, "Crime and Punishment with Habit Formation," Theoretical Economics Letters, Vol. 1 No. 3, 2011, pp. 99-104. doi: 10.4236/tel.2011.13021.

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