BA 372 Lesson 5 Assignment 3

BA 372 Lesson 5 Assignment 3 - Ashley B. Hilliard...

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Ashley B. Hilliard 258-10-0169 July 5, 2010-October 22, 2010 BA 372 Lesson#5, Assignment 3 1. There are two ways to protect your car from theft. The Club makes it difficult for a car thief to take your car. Lojack makes it easier for the police to catch the car thief who has stolen it. Which of these types of protection conveys a negative externality on other car owners:? Which conveys a positive externality? Do you think there are any policy implications of your analysis? When a thief sees the "club" on a potential car, they just move to the next car rather than stealing that car because they know it’s too much work. So the odds of that car being stolen are decreased, and the odds are increased on other vehicles being stolen, which is a negative externality. With “Lojack”, a thief wouldn’t know which car has it. This can both discourage a car theft as well as catch more car thieves who steal cars equipped with Lojack. So that's a positive externality, since people even without Lojack equipped benefit from others having it. For policy implications, it seems like it might be a good idea to encourage Lojack, by offiring a
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This note was uploaded on 02/22/2011 for the course ECON BA 372 taught by Professor Dickliter during the Summer '10 term at Andrew Jackson.

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BA 372 Lesson 5 Assignment 3 - Ashley B. Hilliard...

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