This article investigates the influence of interjurisdictional externalities and cooperation on police expenditures and crime rates. Police protection generates both positive externalities (protection provided to individuals commuting into a jurisdiction) and negative externalities (crime diverted out of ajurisdiction); cooperation among police agencies has both an internalization effect (which compensates for the influence of externalities) and an efficiency effect (which reduces the cost of providing police services). Empirical analysis of 1970 data for a sample of 64 SMSAs suggests that crime diversions are the dominant externality and that cost reductions are the dominant effect of cooperation.
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