Abstract
This paper studies spillover effects from private crime protection technologies. Criminals and victims interact in a frictional market for offenses. Private protection diverts crime towards unprotected targets, but also discourages criminal activity. The relative strength of these two effects determines the sign of externalities among potential victims. Using originally collected data from Buenos Aires, evidence shows that (i) private protection investment is spatially concentrated, and (ii) neighbors’ investment in private protection has a causal positive and significant effect on own investment. To achieve identification, I exploit variation in the investment status of close neighbors as induced by their knowledge of crimes targeting friends, relatives, acquaintances or others, and occurred farther away. Neighbors’ investment in alarms and cameras significantly increases a household's propensity to invest in the same technology. Externalities raise the scope for government intervention, while geo-referenced information on private protection can inform policy with regard to the spatial distribution of policing effort and public investment in security.
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