Law Enforcement Agencies as Multi-Product Firms - An Econometric Investigation of Production Costs

The study adopted the economic model of an optimizing firm as a framework for characterizing the production structure of the sample. Unlike previous studies, this one began with a second order approximation to an arbitrary multi-out-multi-input production possibilities function. This general functional specification permits the test of a number of hypotheses which have been implicitly maintained in earlier work. Findings showed the decisions of police administrators to be inconsistent with cost minimization. The hypothesis of nonjoint production was also rejected. The sample did not support the existence of a consistent index for any one of the possible sub-aggregates of outputs. These findings make explicit that the usual aggregation of all police outputs into one measure or estimation of separate production (cost) functions is accompanied by a loss of information. In addition, the hypothesis of constant returns to scale is rejected, and scale economies varied considerably with activity levels. A task for future research is to disagrregate the 'crimes against the person' output and to incorporate these variables diirectly into the decision problem underlying estimation. Initial work in this area seems to indicate that unit costs for clearing homicides are greater than that of any other police activity. Tabular data, notes, and 21 references are provided. (Author abstract modified)