DP10707 | Property crime and private protection allocation within cities: theory and evidence

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We model the allocation of property crime and private protection within cities. We provide a theory where city-specific criminals choose a neighborhood and whether they pay a search cost to compare potential victims, whereas households invest in self-protection. The model features strategic complementarity between criminals' search efforts and households' protection investments. As criminals' return to search increases with neighborhood wealth, households in rich neighborhoods are more likely to enter a rat race to ever greater protection that drives criminals towards poorer areas. The mechanisms of our model are tested with the Canadian General Social Survey. Household protection increases with household and neighborhood incomes, neighborhood protection, and neighborhood victimization.