Private car alarm systems with red blinking lights would tend to:
A) decrease the likelihood of car thefts to all car owners.
B) increase the likelihood of car thefts to all car owners.
C) redistribute the likelihood of a car theft from those car owners with such a device to those car owners without such a device.
D) offer a positive externality to those car owners who did not pay for the device.

Question

Quizplus · Accepted Answer

Private car alarm systems with red blinking lights only serve as a visual deterrent to potential thieves. They do not necessarily enhance the security of the car. Hence, car owners without such a device may be more susceptible to car theft, thereby increasing the likelihood of a car theft for them. Conversely, car owners with a car alarm system may have a decreased likelihood of theft as they have added security. Thus, the likelihood of car theft is redistributed from those car owners without a device to those with the device. This phenomenon is known as the "waterbed effect," where the pressure is shifted from one area to another. Therefore, the private car alarm system with red blinking lights offers no positive externality to those who did not pay for the device.

Private Car Alarm Systems with Red Blinking Lights Would Tend