NCJ Number
111517
Date Published
1986
Length
55 pages
Annotation
The various models of illegal behavior presented have essential characteristics that make them similar to the traditional models of asset-pricing in finance theory.
Abstract
For the most part, economic models of criminal behavior have focused on the behavior of specific individuals. The notion of a marketplace where goods (both legal and illegal) are exchanged at competitive prices is implicit in the discussions but is rarely explicitly modeled. Individuals, for example, invest in legal activities such as education and on-the-job training. These investments become an asset to the individual and can be traded or rented in the marketplace. It is difficult to explain the existence of legal human capital investments unless the environment where these investments are traded (the labor market) is described. Similarly, persons can acquire skills or goods considered illegal in a particular setting. These acquisitions are capital assets the individual can take into the marketplace where such assets are traded and sell or rent at a competitive price. Motivations for participating in the illegal sector will depend on the market characteristics where illegal goods and skills are traded. The proposed models, which are similar to the traditional models of asset-pricing in finance theory, are based on the principles that investments are risky, individuals can invest in either legal or illegal human capital, and markets exist where legal and illegal commodities can be sold or traded.