Day 102


April 10th, 2012

LoJack is a tracking system that allows police to locate a stolen vehicle by following the radio transmissions from a small transceiver hidden somewhere in the vehicle. If you're interested in such things, I'd recommend reading this analysis of some of LoJack's societal impacts. Here's a summary:

Most measures that people take to protect their property are highly visible, and that's intentional — if the potential thief sees that you have an alarm system, he's less likely to break in. But that also means he's more likely to break into someone else's car instead; this is what economists call a negative externality. LoJack, on the other hand, is not advertised on the vehicle at all — you don't want the thief to know it's present, or he might try to remove it. Since he doesn't know which cars are equipped with LoJack and which aren't, he becomes more hesitant to steal any cars. This results in a positive externality: your purchase of a LoJack system brings benefits to all car owners, whether they have LoJack or not.

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