Consider two ways to protect your car from theft.The Club (a steering wheel lock) makes it difficult fora car thief to take your car. Lojack (a tracking system)makes it easier for the police to catch the car thiefwho has stolen it. Which of these methods confersa negative externality on other car owners? Whichconfers a positive externality? Do you think there areany policy implications of your analysis?

Microeconomics
13th Edition
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Roger A. Arnold
Chapter17: Market Failure: Externalities, Public Goods, And Asymmetric Information
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Consider two ways to protect your car from theft.
The Club (a steering wheel lock) makes it difficult for
a car thief to take your car. Lojack (a tracking system)
makes it easier for the police to catch the car thief
who has stolen it. Which of these methods confers
a negative externality on other car owners? Which
confers a positive externality? Do you think there are
any policy implications of your analysis?

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