Guns, Violence, and the Efficiency of Illegal Markets

Posted: 14 Jul 1998

See all articles by John J. Donohue

John J. Donohue

Stanford Law School; National Bureau of Economic Research (NBER)

Steven D. Levitt

University of Chicago; National Bureau of Economic Research (NBER); American Bar Foundation

Abstract

This paper provides a theoretical analysis of violence as a mechanism for allocating scarce resources in a nonmarket setting. We demonstrate that the efficiency with which resources are allocated in that context are strongly positively related to the predictability of fight outcomes. The lethality of the weapons used, in contrast, has an indeterminate impact on the costs of violence, except at very high or very low levels of lethality. Our results suggest that the observed link between guns and homicide rates may not be primarily attributable to the lethality of guns, but rather to the lack of ex ante predictability of the winner when guns are involved in a fight.

Suggested Citation

Donohue, John J. and Levitt, Steven D., Guns, Violence, and the Efficiency of Illegal Markets. Available at SSRN: https://ssrn.com/abstract=96635

John J. Donohue (Contact Author)

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Steven D. Levitt

University of Chicago ( email )

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